In this article we will check out the progression of hedge fund sentiment towards LEAP THERAPEUTICS, INC. (NASDAQ:LPTX) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
LEAP THERAPEUTICS, INC. (NASDAQ:LPTX) shareholders have witnessed an increase in support from the world’s most elite money managers recently. Our calculations also showed that LPTX 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 a lot of formulas stock market investors can use to analyze publicly traded companies. Two of the less known formulas are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the best money managers can trounce the market by a significant margin (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to go over the new hedge fund action encompassing LEAP THERAPEUTICS, INC. (NASDAQ:LPTX).
How have hedgies been trading LEAP THERAPEUTICS, INC. (NASDAQ:LPTX)?
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the fourth quarter of 2019. By comparison, 1 hedge funds held shares or bullish call options in LPTX 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.
The largest stake in LEAP THERAPEUTICS, INC. (NASDAQ:LPTX) was held by Perceptive Advisors, which reported holding $10.6 million worth of stock at the end of September. It was followed by Sio Capital with a $1.7 million position. Other investors bullish on the company included Baker Bros. Advisors, Sphera Global Healthcare Fund, and Alyeska Investment Group. In terms of the portfolio weights assigned to each position Sio Capital allocated the biggest weight to LEAP THERAPEUTICS, INC. (NASDAQ:LPTX), around 0.58% of its 13F portfolio. Perceptive Advisors is also relatively very bullish on the stock, dishing out 0.28 percent of its 13F equity portfolio to LPTX.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Perceptive Advisors, managed by Joseph Edelman, created the biggest position in LEAP THERAPEUTICS, INC. (NASDAQ:LPTX). Perceptive Advisors had $10.6 million invested in the company at the end of the quarter. Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund also initiated a $0.9 million position during the quarter. The only other fund with a new position in the stock is Renaissance Technologies.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as LEAP THERAPEUTICS, INC. (NASDAQ:LPTX) but similarly valued. These stocks are Astro-Med, Inc. (NASDAQ:ALOT), Synlogic, Inc. (NASDAQ:SYBX), ReneSola Ltd. (NYSE:SOL), and Big Rock Partners Acquisition Corp. (NASDAQ:BRPA). This group of stocks’ market caps match LPTX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ALOT | 7 | 7527 | 0 |
| SYBX | 6 | 5652 | -1 |
| SOL | 3 | 17210 | 1 |
| BRPA | 6 | 2055 | -2 |
| Average | 5.5 | 8111 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $16 million in LPTX’s case. Astro-Med, Inc. (NASDAQ:ALOT) is the most popular stock in this table. On the other hand ReneSola Ltd. (NYSE:SOL) is the least popular one with only 3 bullish hedge fund positions. LEAP THERAPEUTICS, INC. (NASDAQ:LPTX) is not the most popular stock in this group but hedge fund interest is still above average. 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 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on LPTX as the stock returned 55.1% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.