The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded 89bio, Inc. (NASDAQ:ETNB) based on those filings.
89bio, Inc. (NASDAQ:ETNB) was in 3 hedge funds’ portfolios at the end of March. ETNB has seen a decrease in support from the world’s most elite money managers lately. There were 6 hedge funds in our database with ETNB holdings at the end of the previous quarter. Our calculations also showed that ETNB 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.
According to most investors, hedge funds are perceived as underperforming, old financial tools of years past. While there are more than 8000 funds with their doors open at the moment, Our experts look at the moguls of this club, about 850 funds. These investment experts orchestrate bulk of all hedge funds’ total capital, and by keeping an eye on their best stock picks, Insider Monkey has discovered a few investment strategies that have historically defeated Mr. Market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a glance at the new hedge fund action surrounding 89bio, Inc. (NASDAQ:ETNB).
What does smart money think about 89bio, Inc. (NASDAQ:ETNB)?
Heading into the second quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -50% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in ETNB a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, OrbiMed Advisors, managed by Samuel Isaly, holds the biggest position in 89bio, Inc. (NASDAQ:ETNB). OrbiMed Advisors has a $101.1 million position in the stock, comprising 1.7% of its 13F portfolio. The second largest stake is held by RA Capital Management, managed by Peter Kolchinsky, which holds a $79.8 million position; 2.5% of its 13F portfolio is allocated to the company. In terms of the portfolio weights assigned to each position RA Capital Management allocated the biggest weight to 89bio, Inc. (NASDAQ:ETNB), around 2.52% of its 13F portfolio. Logos Capital is also relatively very bullish on the stock, dishing out 2.37 percent of its 13F equity portfolio to ETNB.
Because 89bio, Inc. (NASDAQ:ETNB) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of funds who sold off their entire stakes last quarter. Interestingly, Anand Parekh’s Alyeska Investment Group dumped the largest stake of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $3.1 million in stock. Ryan Tolkin (CIO)’s fund, Schonfeld Strategic Advisors, also said goodbye to its stock, about $0.7 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 3 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to 89bio, Inc. (NASDAQ:ETNB). We will take a look at Organigram Holdings Inc. (NASDAQ:OGI), Customers Bancorp Inc (NASDAQ:CUBI), Preferred Apartment Communities Inc. (NYSE:APTS), and Hemisphere Media Group Inc (NASDAQ:HMTV). This group of stocks’ market values are closest to ETNB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OGI | 7 | 2666 | 2 |
| CUBI | 13 | 25069 | -3 |
| APTS | 9 | 7482 | 0 |
| HMTV | 9 | 26404 | 1 |
| Average | 9.5 | 15405 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $187 million in ETNB’s case. Customers Bancorp Inc (NASDAQ:CUBI) is the most popular stock in this table. On the other hand Organigram Holdings Inc. (NASDAQ:OGI) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks 89bio, Inc. (NASDAQ:ETNB) is even less popular than OGI. Hedge funds dodged a bullet by taking a bearish stance towards ETNB. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but managed to beat the market by 15.6 percentage points. Unfortunately ETNB wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); ETNB investors were disappointed as the stock returned 3% during the second quarter (through May 22nd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.