A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Intec Pharma Ltd (NASDAQ:NTEC).
Intec Pharma Ltd (NASDAQ:NTEC) was in 5 hedge funds’ portfolios at the end of the third quarter of 2019. NTEC shareholders have witnessed a decrease in enthusiasm from smart money in recent months. There were 11 hedge funds in our database with NTEC holdings at the end of the previous quarter. Our calculations also showed that NTEC 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 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 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Phill Gross of Adage Capital Management
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. Now we’re going to take a glance at the new hedge fund action encompassing Intec Pharma Ltd (NASDAQ:NTEC).
Hedge fund activity in Intec Pharma Ltd (NASDAQ:NTEC)
Heading into the fourth quarter of 2019, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -55% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards NTEC over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the largest position in Intec Pharma Ltd (NASDAQ:NTEC). Adage Capital Management has a $1.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Citadel Investment Group, led by Ken Griffin, holding a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other peers with similar optimism consist of John Overdeck and David Siegel’s Two Sigma Advisors, Murray Stahl’s Horizon Asset Management and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital. In terms of the portfolio weights assigned to each position Adage Capital Management allocated the biggest weight to Intec Pharma Ltd (NASDAQ:NTEC), around 0.0026% of its 13F portfolio. Horizon Asset Management is also relatively very bullish on the stock, earmarking 0.0002 percent of its 13F equity portfolio to NTEC.
Due to the fact that Intec Pharma Ltd (NASDAQ:NTEC) has witnessed falling interest from the aggregate hedge fund industry, we can see that there was a specific group of funds that elected to cut their full holdings heading into Q4. At the top of the heap, Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management dumped the biggest position of the 750 funds followed by Insider Monkey, valued at an estimated $3.8 million in stock. Behzad Aghazadeh’s fund, venBio Select Advisor, also cut its stock, about $3.6 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 6 funds heading into Q4.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Intec Pharma Ltd (NASDAQ:NTEC) but similarly valued. We will take a look at Nuvectra Corporation (NASDAQ:NVTR), Microbot Medical Inc. (NASDAQ:MBOT), Kazia Therapeutics Limited (NASDAQ:KZIA), and Streamline Health Solutions Inc. (NASDAQ:STRM). All of these stocks’ market caps match NTEC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NVTR | 11 | 1566 | 0 |
| MBOT | 2 | 1510 | -1 |
| KZIA | 2 | 178 | 0 |
| STRM | 5 | 6718 | 0 |
| Average | 5 | 2493 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $1 million in NTEC’s case. Nuvectra Corporation (NASDAQ:NVTR) is the most popular stock in this table. On the other hand Microbot Medical Inc. (NASDAQ:MBOT) is the least popular one with only 2 bullish hedge fund positions. Intec Pharma Ltd (NASDAQ:NTEC) 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 NTEC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NTEC investors were disappointed as the stock returned -32% 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.
