Last year’s fourth quarter was a rough one for investors and many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 37.4% in 2019 (through the end of November) and outperformed the S&P 500 ETF by 9.9 percentage points. We are done processing the latest 13F filings and in this article we will study how hedge fund sentiment towards Omeros Corporation (NASDAQ:OMER) changed during the first quarter.
Omeros Corporation (NASDAQ:OMER) has experienced a decrease in enthusiasm from smart money recently. OMER was in 6 hedge funds’ portfolios at the end of the third quarter of 2019. There were 8 hedge funds in our database with OMER positions at the end of the previous quarter. Our calculations also showed that OMER 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 today’s marketplace there are many gauges shareholders have at their disposal to grade publicly traded companies. Two of the most underrated gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can beat the S&P 500 by a superb margin (see the details here).
David E. Shaw of D.E. Shaw
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 peek at the new hedge fund action encompassing Omeros Corporation (NASDAQ:OMER).
How have hedgies been trading Omeros Corporation (NASDAQ:OMER)?
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in OMER over the last 17 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Mitchell Blutt’s Consonance Capital Management has the number one position in Omeros Corporation (NASDAQ:OMER), worth close to $46.2 million, amounting to 4.6% of its total 13F portfolio. Sitting at the No. 2 spot is D E Shaw, managed by David E. Shaw, which holds a $36 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism include Sculptor Capital, Ken Griffin’s Citadel Investment Group and Paul Tudor Jones’s Tudor Investment Corp. In terms of the portfolio weights assigned to each position Consonance Capital Management allocated the biggest weight to Omeros Corporation (NASDAQ:OMER), around 4.57% of its 13F portfolio. D E Shaw is also relatively very bullish on the stock, designating 0.04 percent of its 13F equity portfolio to OMER.
Due to the fact that Omeros Corporation (NASDAQ:OMER) has witnessed bearish sentiment from hedge fund managers, we can see that there is a sect of hedgies who were dropping their positions entirely in the third quarter. Interestingly, Israel Englander’s Millennium Management cut the biggest position of the 750 funds monitored by Insider Monkey, totaling about $10.8 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also dropped its stock, about $0.6 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 2 funds in the third quarter.
Let’s go over hedge fund activity in other stocks similar to Omeros Corporation (NASDAQ:OMER). We will take a look at Oil States International, Inc. (NYSE:OIS), Dova Pharmaceuticals, Inc. (NASDAQ:DOVA), Tactile Systems Technology, Inc. (NASDAQ:TCMD), and Associated Capital Group, Inc. (NYSE:AC). This group of stocks’ market values resemble OMER’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OIS | 12 | 39976 | 3 |
| DOVA | 12 | 165203 | 3 |
| TCMD | 10 | 25776 | -5 |
| AC | 6 | 64036 | 0 |
| Average | 10 | 73748 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $74 million. That figure was $87 million in OMER’s case. Oil States International, Inc. (NYSE:OIS) is the most popular stock in this table. On the other hand Associated Capital Group, Inc. (NYSE:AC) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Omeros Corporation (NASDAQ:OMER) is even less popular than AC. Hedge funds dodged a bullet by taking a bearish stance towards OMER. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately OMER wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); OMER investors were disappointed as the stock returned -9.4% during the fourth quarter (through the end of November) 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 so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
