We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Altimmune, Inc. (NASDAQ:ALT).
Is Altimmune, Inc. (NASDAQ:ALT) the right investment to pursue these days? Money managers are taking an optimistic view. The number of bullish hedge fund bets improved by 1 lately. Our calculations also showed that ALT 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.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Harding of Winton 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. With all of this in mind we’re going to view the recent hedge fund action surrounding Altimmune, Inc. (NASDAQ:ALT).
How are hedge funds trading Altimmune, Inc. (NASDAQ:ALT)?
At Q3’s end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in ALT 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.
According to Insider Monkey’s hedge fund database, David Harding’s Winton Capital Management has the number one position in Altimmune, Inc. (NASDAQ:ALT), worth close to $0.1 million, corresponding to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, holding a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other peers that are bullish contain Hal Mintz’s Sabby Capital, Ken Griffin’s Citadel Investment Group and . In terms of the portfolio weights assigned to each position Sabby Capital allocated the biggest weight to Altimmune, Inc. (NASDAQ:ALT), around 0.04% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.0012 percent of its 13F equity portfolio to ALT.
As one would reasonably expect, some big names were breaking ground themselves. Winton Capital Management, managed by David Harding, assembled the largest position in Altimmune, Inc. (NASDAQ:ALT). Winton Capital Management had $0.1 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $0.1 million position during the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Altimmune, Inc. (NASDAQ:ALT). These stocks are JAKKS Pacific, Inc. (NASDAQ:JAKK), Flexible Solutions International, Inc. (NYSE:FSI), Wilhelmina International, Inc. (NASDAQ:WHLM), and Neovasc Inc. (NASDAQ:NVCN). All of these stocks’ market caps resemble ALT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JAKK | 4 | 2798 | 0 |
| FSI | 1 | 926 | 0 |
| WHLM | 1 | 1291 | 0 |
| NVCN | 2 | 1961 | -3 |
| Average | 2 | 1744 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $0 million in ALT’s case. JAKKS Pacific, Inc. (NASDAQ:JAKK) is the most popular stock in this table. On the other hand Flexible Solutions International, Inc. (NYSE:FSI) is the least popular one with only 1 bullish hedge fund positions. Altimmune, Inc. (NASDAQ:ALT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 ALT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ALT were disappointed as the stock returned -6.7% 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.