The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtPrevail Therapeutics Inc. (NASDAQ:PRVL) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Is Prevail Therapeutics Inc. (NASDAQ:PRVL) a buy here? Investors who are in the know were taking an optimistic view. The number of long hedge fund bets advanced by 4 in recent months. Our calculations also showed that PRVL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). PRVL was in 12 hedge funds’ portfolios at the end of March. There were 8 hedge funds in our database with PRVL holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Daniel Gold of QVT Financial
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s go over the recent hedge fund action regarding Prevail Therapeutics Inc. (NASDAQ:PRVL).
What have hedge funds been doing with Prevail Therapeutics Inc. (NASDAQ:PRVL)?
At Q1’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PRVL over the last 18 quarters. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
More specifically, OrbiMed Advisors was the largest shareholder of Prevail Therapeutics Inc. (NASDAQ:PRVL), with a stake worth $168.5 million reported as of the end of September. Trailing OrbiMed Advisors was RA Capital Management, which amassed a stake valued at $39.5 million. EcoR1 Capital, Citadel Investment Group, and Adage Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position EcoR1 Capital allocated the biggest weight to Prevail Therapeutics Inc. (NASDAQ:PRVL), around 2.86% of its 13F portfolio. OrbiMed Advisors is also relatively very bullish on the stock, designating 2.83 percent of its 13F equity portfolio to PRVL.
As industrywide interest jumped, specific money managers were breaking ground themselves. Woodline Partners, managed by Michael Rockefeller and KarláKroeker, assembled the most outsized position in Prevail Therapeutics Inc. (NASDAQ:PRVL). Woodline Partners had $3.1 million invested in the company at the end of the quarter. Daniel Gold’s QVT Financial also made a $1.6 million investment in the stock during the quarter. The other funds with brand new PRVL positions are Israel Englander’s Millennium Management and Renaissance Technologies.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Prevail Therapeutics Inc. (NASDAQ:PRVL) but similarly valued. These stocks are Vericel Corp (NASDAQ:VCEL), Twin River Worldwide Holdings Inc. (NYSE:TRWH), The First of Long Island Corporation (NASDAQ:FLIC), and Anika Therapeutics, Inc. (NASDAQ:ANIK). All of these stocks’ market caps are similar to PRVL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VCEL | 18 | 70625 | -7 |
| TRWH | 13 | 83082 | -2 |
| FLIC | 12 | 31326 | 3 |
| ANIK | 19 | 48692 | 0 |
| Average | 15.5 | 58431 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $58 million. That figure was $269 million in PRVL’s case. Anika Therapeutics, Inc. (NASDAQ:ANIK) is the most popular stock in this table. On the other hand The First of Long Island Corporation (NASDAQ:FLIC) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Prevail Therapeutics Inc. (NASDAQ:PRVL) is even less popular than FLIC. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but managed to beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on PRVL, though not to the same extent, as the stock returned 22.2% during the second quarter and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
