We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Neoleukin Therapeutics, Inc. (NASDAQ:NLTX) based on that data.
Hedge fund interest in Neoleukin Therapeutics, Inc. (NASDAQ:NLTX) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare NLTX to other stocks including Cellcom Israel Ltd. (NYSE:CEL), DBV Technologies SA (NASDAQ:DBVT), and World Acceptance Corp. (NASDAQ:WRLD) to get a better sense of its popularity.
Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Oleg Nodelman of EcoR1 Capital
Now let’s take a peek at the key hedge fund action regarding Neoleukin Therapeutics, Inc. (NASDAQ:NLTX).
Hedge fund activity in Neoleukin Therapeutics, Inc. (NASDAQ:NLTX)
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in NLTX over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Redmile Group held the most valuable stake in Neoleukin Therapeutics, Inc. (NASDAQ:NLTX), which was worth $46 million at the end of the third quarter. On the second spot was EcoR1 Capital which amassed $42 million worth of shares. Baker Bros. Advisors, Opaleye Management, and OrbiMed Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position EcoR1 Capital allocated the biggest weight to Neoleukin Therapeutics, Inc. (NASDAQ:NLTX), around 4.39% of its 13F portfolio. Opaleye Management is also relatively very bullish on the stock, earmarking 4.22 percent of its 13F equity portfolio to NLTX.
Because Neoleukin Therapeutics, Inc. (NASDAQ:NLTX) has witnessed declining sentiment from the smart money, it’s safe to say that there exists a select few money managers that elected to cut their entire stakes by the end of the first quarter. It’s worth mentioning that Arsani William’s Logos Capital cut the biggest position of the “upper crust” of funds monitored by Insider Monkey, comprising close to $0.5 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also said goodbye to its stock, about $0.4 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to Neoleukin Therapeutics, Inc. (NASDAQ:NLTX). We will take a look at Cellcom Israel Ltd. (NYSE:CEL), DBV Technologies SA (NASDAQ:DBVT), World Acceptance Corp. (NASDAQ:WRLD), and Horizon Bancorp (NASDAQ:HBNC). This group of stocks’ market caps are similar to NLTX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CEL | 1 | 11104 | -1 |
| DBVT | 10 | 115317 | -3 |
| WRLD | 13 | 101286 | -1 |
| HBNC | 11 | 19457 | 1 |
| Average | 8.75 | 61791 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $62 million. That figure was $197 million in NLTX’s case. World Acceptance Corp. (NASDAQ:WRLD) is the most popular stock in this table. On the other hand Cellcom Israel Ltd. (NYSE:CEL) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Neoleukin Therapeutics, Inc. (NASDAQ:NLTX) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. Unfortunately NLTX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on NLTX were disappointed as the stock returned 18.8% during the second quarter (through June 17th) 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 in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
