The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Aspen Aerogels Inc (NYSE:ASPN) and determine whether the smart money was really smart about this stock.
Aspen Aerogels Inc (NYSE:ASPN) was in 10 hedge funds’ portfolios at the end of the first quarter of 2020. ASPN shareholders have witnessed an increase in support from the world’s most elite money managers of late. There were 7 hedge funds in our database with ASPN positions at the end of the previous quarter. Our calculations also showed that ASPN 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.
In the financial world there are several signals market participants can use to size up stocks. Two of the most under-the-radar signals are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the best investment managers can beat the S&P 500 by a superb amount (see the details here).
Richard Driehaus of Driehaus Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s review the recent hedge fund action encompassing Aspen Aerogels Inc (NYSE:ASPN).
What does smart money think about Aspen Aerogels Inc (NYSE:ASPN)?
At Q1’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 43% from the previous quarter. By comparison, 4 hedge funds held shares or bullish call options in ASPN a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Royce & Associates held the most valuable stake in Aspen Aerogels Inc (NYSE:ASPN), which was worth $4.5 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $3.9 million worth of shares. Harvey Partners, Driehaus Capital, and Millennium Management 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 Harvey Partners allocated the biggest weight to Aspen Aerogels Inc (NYSE:ASPN), around 3.04% of its 13F portfolio. G2 Investment Partners Management is also relatively very bullish on the stock, designating 0.42 percent of its 13F equity portfolio to ASPN.
Now, key hedge funds have jumped into Aspen Aerogels Inc (NYSE:ASPN) headfirst. Driehaus Capital, managed by Richard Driehaus, assembled the largest position in Aspen Aerogels Inc (NYSE:ASPN). Driehaus Capital had $2.6 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $1.3 million position during the quarter. The following funds were also among the new ASPN investors: Josh Goldberg’s G2 Investment Partners Management, Keith M. Rosenbloom’s Cruiser Capital Advisors, and Ken Griffin’s Citadel Investment Group.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Aspen Aerogels Inc (NYSE:ASPN) but similarly valued. We will take a look at MediciNova, Inc. (NASDAQ:MNOV), Menlo Therapeutics Inc. (NASDAQ:MNLO), Ovid Therapeutics Inc. (NASDAQ:OVID), and Jounce Therapeutics, Inc. (NASDAQ:JNCE). This group of stocks’ market valuations are similar to ASPN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MNOV | 6 | 1474 | -1 |
| MNLO | 18 | 53964 | 11 |
| OVID | 12 | 18770 | -5 |
| JNCE | 10 | 8854 | -6 |
| Average | 11.5 | 20766 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $17 million in ASPN’s case. Menlo Therapeutics Inc. (NASDAQ:MNLO) is the most popular stock in this table. On the other hand MediciNova, Inc. (NASDAQ:MNOV) is the least popular one with only 6 bullish hedge fund positions. Aspen Aerogels Inc (NYSE:ASPN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately ASPN wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); ASPN investors were disappointed as the stock returned 7.2% during the second quarter 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.
