Hedge Funds Cashed Out Of AnaptysBio, Inc. (ANAB) Too Early

The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards AnaptysBio, Inc. (NASDAQ:ANAB).

AnaptysBio, Inc. (NASDAQ:ANAB) has seen a decrease in support from the world’s most elite money managers of late. AnaptysBio, Inc. (NASDAQ:ANAB) was in 18 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 27. Our calculations also showed that ANAB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 115 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.

Israel Englander of Millennium Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a look at the key hedge fund action regarding AnaptysBio, Inc. (NASDAQ:ANAB).

Do Hedge Funds Think ANAB Is A Good Stock To Buy Now?

At first quarter’s end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -31% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ANAB over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in AnaptysBio, Inc. (NASDAQ:ANAB) was held by EcoR1 Capital, which reported holding $154.1 million worth of stock at the end of December. It was followed by Tang Capital Management with a $56.6 million position. Other investors bullish on the company included Biotechnology Value Fund / BVF Inc, Frazier Healthcare Partners, and Cormorant Asset Management. In terms of the portfolio weights assigned to each position Tang Capital Management allocated the biggest weight to AnaptysBio, Inc. (NASDAQ:ANAB), around 15.94% of its 13F portfolio. EcoR1 Capital is also relatively very bullish on the stock, dishing out 6.84 percent of its 13F equity portfolio to ANAB.

Judging by the fact that AnaptysBio, Inc. (NASDAQ:ANAB) has witnessed a decline in interest from the aggregate hedge fund industry, logic holds that there is a sect of money managers who were dropping their positions entirely in the first quarter. It’s worth mentioning that Marc Schneidman’s Aquilo Capital Management cut the largest investment of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $26.1 million in stock, and Joseph Edelman’s Perceptive Advisors was right behind this move, as the fund dropped about $25.7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 8 funds in the first quarter.

Let’s also examine hedge fund activity in other stocks similar to AnaptysBio, Inc. (NASDAQ:ANAB). We will take a look at RADA Electronic Industries Ltd. (NASDAQ:RADA), Luxfer Holdings PLC (NYSE:LXFR), El Pollo LoCo Holdings Inc (NASDAQ:LOCO), Cambridge Bancorp (NASDAQ:CATC), U.S. Xpress Enterprises, Inc. (NYSE:USX), Franklin Street Properties Corp. (NYSE:FSP), and Anika Therapeutics, Inc. (NASDAQ:ANIK). This group of stocks’ market valuations match ANAB’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.1 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $334 million in ANAB’s case. Anika Therapeutics, Inc. (NASDAQ:ANIK) is the most popular stock in this table. On the other hand Cambridge Bancorp (NASDAQ:CATC) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks AnaptysBio, Inc. (NASDAQ:ANAB) is more popular among hedge funds. Our overall hedge fund sentiment score for ANAB is 67. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and still managed to beat the market by 10.1 percentage points. Hedge funds were also right about betting on ANAB, though not to the same extent, as the stock returned 19.5% since the end of March (through July 23rd) and outperformed the market as well.

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

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