Hedge Funds Are Done Buying AnaptysBio, Inc. (ANAB)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of AnaptysBio, Inc. (NASDAQ:ANAB) based on that data.

AnaptysBio, Inc. (NASDAQ:ANAB) shareholders have witnessed a decrease in activity from the world’s largest hedge funds in recent months. ANAB was in 25 hedge funds’ portfolios at the end of the first quarter of 2020. There were 27 hedge funds in our database with ANAB positions at the end of the previous quarter. Our calculations also showed that ANAB 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).

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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Oleg Nodelman of EcoR1 Capital

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s review the fresh hedge fund action encompassing AnaptysBio, Inc. (NASDAQ:ANAB).

Hedge fund activity in AnaptysBio, Inc. (NASDAQ:ANAB)

At the end of the first quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ANAB over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, EcoR1 Capital held the most valuable stake in AnaptysBio, Inc. (NASDAQ:ANAB), which was worth $42.9 million at the end of the third quarter. On the second spot was Frazier Healthcare Partners which amassed $32.7 million worth of shares. Tang Capital Management, Biotechnology Value Fund / BVF Inc, and Aquilo 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 Aquilo Capital Management allocated the biggest weight to AnaptysBio, Inc. (NASDAQ:ANAB), around 7.92% of its 13F portfolio. Tang Capital Management is also relatively very bullish on the stock, designating 4.55 percent of its 13F equity portfolio to ANAB.

Due to the fact that AnaptysBio, Inc. (NASDAQ:ANAB) has faced falling interest from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of funds that slashed their positions entirely by the end of the first quarter. Intriguingly, Kevin Kotler’s Broadfin Capital cut the largest investment of all the hedgies followed by Insider Monkey, worth close to $3.6 million in stock, and Neil Shahrestani’s Ikarian Capital was right behind this move, as the fund said goodbye to about $2.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 2 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks similar to AnaptysBio, Inc. (NASDAQ:ANAB). These stocks are The Marcus Corporation (NYSE:MCS), Par Pacific Holdings, Inc. (NYSE:PARR), Independence Holding Company (NYSE:IHC), and Hawkins, Inc. (NASDAQ:HWKN). This group of stocks’ market caps match ANAB’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $232 million in ANAB’s case. Par Pacific Holdings, Inc. (NYSE:PARR) is the most popular stock in this table. On the other hand Independence Holding Company (NYSE:IHC) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks AnaptysBio, Inc. (NASDAQ:ANAB) is more popular among hedge funds. 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 returned 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on ANAB as the stock returned 43.3% so far in Q2 (through June 10th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

Disclosure: None. This article was originally published at Insider Monkey.