Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the fourth quarter of 2018 we observed increased volatility and a 20% drop in stock prices. Things completely reversed in 2019 and stock indices hit record highs. Recent hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards ImmuCell Corporation (NASDAQ:ICCC) to find out whether it was one of their high conviction long-term ideas.
ImmuCell Corporation (NASDAQ:ICCC) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of the third quarter of 2019. At the end of this article we will also compare ICCC to other stocks including China Jo Jo Drugstores Inc (NASDAQ:CJJD), Surface Oncology, Inc. (NASDAQ:SURF), and Lazydays Holdings, Inc. (NASDAQ:LAZY) to get a better sense of its popularity.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 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 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Charles Davidson of Wexford Capital
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 take a peek at the fresh hedge fund action regarding ImmuCell Corporation (NASDAQ:ICCC).
What have hedge funds been doing with ImmuCell Corporation (NASDAQ:ICCC)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2019. By comparison, 1 hedge funds held shares or bullish call options in ICCC a year ago. 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 publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Antara Capital, managed by Himanshu Gulati, holds the number one position in ImmuCell Corporation (NASDAQ:ICCC). Antara Capital has a $0.6 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is Renaissance Technologies, which holds a $0.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that are bullish include Charles Davidson and Joseph Jacobs’s Wexford Capital, David P. Cohen’s Minerva Advisors and . In terms of the portfolio weights assigned to each position Antara Capital allocated the biggest weight to ImmuCell Corporation (NASDAQ:ICCC), around 0.27% of its 13F portfolio. Wexford Capital is also relatively very bullish on the stock, earmarking 0.05 percent of its 13F equity portfolio to ICCC.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as ImmuCell Corporation (NASDAQ:ICCC) but similarly valued. We will take a look at China Jo Jo Drugstores Inc (NASDAQ:CJJD), Surface Oncology, Inc. (NASDAQ:SURF), Lazydays Holdings, Inc. (NASDAQ:LAZY), and Zomedica Pharmaceuticals Corp. (NYSE:ZOM). All of these stocks’ market caps are similar to ICCC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CJJD | 4 | 8490 | 0 |
| SURF | 5 | 4909 | -2 |
| LAZY | 5 | 8105 | 0 |
| ZOM | 5 | 64 | 3 |
| Average | 4.75 | 5392 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $2 million in ICCC’s case. Surface Oncology, Inc. (NASDAQ:SURF) is the most popular stock in this table. On the other hand China Jo Jo Drugstores Inc (NASDAQ:CJJD) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks ImmuCell Corporation (NASDAQ:ICCC) is even less popular than CJJD. Hedge funds dodged a bullet by taking a bearish stance towards ICCC. 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 ICCC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ICCC investors were disappointed as the stock returned -10.2% 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.
