How do we determine whether Assertio Therapeutics, Inc. (NASDAQ:ASRT) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Assertio Therapeutics, Inc. (NASDAQ:ASRT) shareholders have witnessed an increase in enthusiasm from smart money of late. Our calculations also showed that ASRT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Howard Marks of Oaktree Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the recent hedge fund action encompassing Assertio Therapeutics, Inc. (NASDAQ:ASRT).
What does smart money think about Assertio Therapeutics, Inc. (NASDAQ:ASRT)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the previous quarter. By comparison, 11 hedge funds held shares or bullish call options in ASRT a year ago. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the largest position in Assertio Therapeutics, Inc. (NASDAQ:ASRT), worth close to $7.3 million, comprising less than 0.1%% of its total 13F portfolio. On Renaissance Technologies’s heels is D E Shaw, managed by David E. Shaw, which holds a $4.6 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining professional money managers that hold long positions consist of Cliff Asness’s AQR Capital Management, Howard Marks’s Oaktree Capital Management and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Factorial Partners allocated the biggest weight to Assertio Therapeutics, Inc. (NASDAQ:ASRT), around 0.05% of its 13F portfolio. HighVista Strategies is also relatively very bullish on the stock, dishing out 0.04 percent of its 13F equity portfolio to ASRT.
Consequently, key hedge funds have jumped into Assertio Therapeutics, Inc. (NASDAQ:ASRT) headfirst. Oaktree Capital Management, managed by Howard Marks, created the most valuable position in Assertio Therapeutics, Inc. (NASDAQ:ASRT). Oaktree Capital Management had $1.9 million invested in the company at the end of the quarter. Andre F. Perold’s HighVista Strategies also initiated a $0.1 million position during the quarter. The only other fund with a brand new ASRT position is Mark Kleiman’s Factorial Partners.
Let’s now review hedge fund activity in other stocks similar to Assertio Therapeutics, Inc. (NASDAQ:ASRT). These stocks are Landmark Bancorp, Inc. (NASDAQ:LARK), Severn Bancorp Inc (NASDAQ:SVBI), CyberOptics Corporation (NASDAQ:CYBE), and Energous Corporation (NASDAQ:WATT). This group of stocks’ market caps are closest to ASRT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LARK | 2 | 5685 | 0 |
| SVBI | 3 | 10634 | 0 |
| CYBE | 4 | 5550 | -1 |
| WATT | 5 | 1776 | 2 |
| Average | 3.5 | 5911 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.5 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $18 million in ASRT’s case. Energous Corporation (NASDAQ:WATT) is the most popular stock in this table. On the other hand Landmark Bancorp, Inc. (NASDAQ:LARK) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Assertio Therapeutics, Inc. (NASDAQ:ASRT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately ASRT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ASRT were disappointed as the stock returned -40.6% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
