Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Correvio Pharma Corp. (NASDAQ:CORV).
Hedge fund interest in Correvio Pharma Corp. (NASDAQ:CORV) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Galmed Pharmaceuticals Ltd (NASDAQ:GLMD), I.D. Systems, Inc. (NASDAQ:IDSY), and Citizens Holding Company (NASDAQ:CIZN) to gather more data points. Our calculations also showed that CORV 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 the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Chuck Royce of Royce & Associates
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 let’s take a glance at the key hedge fund action regarding Correvio Pharma Corp. (NASDAQ:CORV).
What have hedge funds been doing with Correvio Pharma Corp. (NASDAQ:CORV)?
At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2019. On the other hand, there were a total of 6 hedge funds with a bullish position in CORV a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
The largest stake in Correvio Pharma Corp. (NASDAQ:CORV) was held by Tamarack Capital Management, which reported holding $9 million worth of stock at the end of September. It was followed by Clough Capital Partners with a $4.1 million position. Other investors bullish on the company included Royce & Associates, Rock Springs Capital Management, and Perceptive Advisors. In terms of the portfolio weights assigned to each position Tamarack Capital Management allocated the biggest weight to Correvio Pharma Corp. (NASDAQ:CORV), around 2.35% of its 13F portfolio. Clough Capital Partners is also relatively very bullish on the stock, designating 0.34 percent of its 13F equity portfolio to CORV.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Perceptive Advisors).
Let’s also examine hedge fund activity in other stocks similar to Correvio Pharma Corp. (NASDAQ:CORV). These stocks are Galmed Pharmaceuticals Ltd (NASDAQ:GLMD), I.D. Systems, Inc. (NASDAQ:IDSY), Citizens Holding Company (NASDAQ:CIZN), and Grindrod Shipping Holdings Ltd. (NASDAQ:GRIN). All of these stocks’ market caps match CORV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GLMD | 10 | 26265 | 2 |
| IDSY | 11 | 38014 | 2 |
| CIZN | 1 | 383 | 0 |
| GRIN | 1 | 6058 | 0 |
| Average | 5.75 | 17680 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $22 million in CORV’s case. I.D. Systems, Inc. (NASDAQ:IDSY) is the most popular stock in this table. On the other hand Citizens Holding Company (NASDAQ:CIZN) is the least popular one with only 1 bullish hedge fund positions. Correvio Pharma Corp. (NASDAQ:CORV) 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 CORV wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CORV were disappointed as the stock returned 3.5% 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.
