With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS).
Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS) shareholders have witnessed a decrease in activity from the world’s largest hedge funds in recent months. Our calculations also showed that CRVS 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Samuel Isaly of OrbiMed Advisors
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind we’re going to take a look at the fresh hedge fund action encompassing Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS).
How have hedgies been trading Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CRVS over the last 17 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS) was held by OrbiMed Advisors, which reported holding $20.4 million worth of stock at the end of September. It was followed by Biotechnology Value Fund with a $9.2 million position. Other investors bullish on the company included Millennium Management, Renaissance Technologies, and Rock Springs Capital Management. In terms of the portfolio weights assigned to each position Biotechnology Value Fund allocated the biggest weight to Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS), around 0.96% of its 13F portfolio. OrbiMed Advisors is also relatively very bullish on the stock, earmarking 0.39 percent of its 13F equity portfolio to CRVS.
Since Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS) has faced falling interest from the smart money, logic holds that there were a few funds who were dropping their positions entirely in the third quarter. Interestingly, Donald Sussman’s Paloma Partners said goodbye to the biggest investment of the 750 funds monitored by Insider Monkey, worth close to $0.1 million in stock, and Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management was right behind this move, as the fund sold off about $0 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 1 funds in the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS) but similarly valued. We will take a look at New Home Company Inc (NYSE:NWHM), EMCORE Corporation (NASDAQ:EMKR), Mediwound Ltd (NASDAQ:MDWD), and United-Guardian, Inc. (NASDAQ:UG). This group of stocks’ market values match CRVS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NWHM | 8 | 16623 | 2 |
| EMKR | 13 | 33826 | 2 |
| MDWD | 1 | 918 | 0 |
| UG | 2 | 7909 | 0 |
| Average | 6 | 14819 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $36 million in CRVS’s case. EMCORE Corporation (NASDAQ:EMKR) is the most popular stock in this table. On the other hand Mediwound Ltd (NASDAQ:MDWD) is the least popular one with only 1 bullish hedge fund positions. Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 CRVS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CRVS investors were disappointed as the stock returned 1.3% 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.
