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 Soleno Therapeutics, Inc. (NASDAQ:SLNO).
Soleno Therapeutics, Inc. (NASDAQ:SLNO) investors should pay attention to an increase in hedge fund sentiment lately. SLNO was in 9 hedge funds’ portfolios at the end of the first quarter of 2020. There were 5 hedge funds in our database with SLNO holdings at the end of the previous quarter. Our calculations also showed that SLNO 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.
If you’d ask most market participants, hedge funds are viewed as underperforming, outdated financial vehicles of the past. While there are over 8000 funds in operation at present, We hone in on the moguls of this club, about 850 funds. These investment experts administer most of the hedge fund industry’s total capital, and by tracking their unrivaled picks, Insider Monkey has uncovered a few investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Will Harkey of Nantahala Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. 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. Keeping this in mind let’s take a peek at the latest hedge fund action encompassing Soleno Therapeutics, Inc. (NASDAQ:SLNO).
What have hedge funds been doing with Soleno Therapeutics, Inc. (NASDAQ:SLNO)?
Heading into the second quarter of 2020, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 80% from one quarter earlier. By comparison, 6 hedge funds held shares or bullish call options in SLNO a year ago. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Among these funds, Nantahala Capital Management held the most valuable stake in Soleno Therapeutics, Inc. (NASDAQ:SLNO), which was worth $10.2 million at the end of the third quarter. On the second spot was Vivo Capital which amassed $4.8 million worth of shares. Trellus Management Company, 683 Capital Partners, and Point72 Asset 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 Trellus Management Company allocated the biggest weight to Soleno Therapeutics, Inc. (NASDAQ:SLNO), around 1.9% of its 13F portfolio. Vivo Capital is also relatively very bullish on the stock, setting aside 0.44 percent of its 13F equity portfolio to SLNO.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Trellus Management Company, managed by Adam Usdan, created the biggest position in Soleno Therapeutics, Inc. (NASDAQ:SLNO). Trellus Management Company had $1.1 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $0.9 million investment in the stock during the quarter. The following funds were also among the new SLNO investors: Israel Englander’s Millennium Management and Michael Gelband’s ExodusPoint Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Soleno Therapeutics, Inc. (NASDAQ:SLNO) but similarly valued. These stocks are B Communications Ltd (NASDAQ:BCOM), Venus Concept Inc. (NASDAQ:VERO), The ExOne Company (NASDAQ:XONE), and Intrepid Potash, Inc. (NYSE:IPI). All of these stocks’ market caps match SLNO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BCOM | 1 | 62 | 0 |
| VERO | 2 | 854 | -1 |
| XONE | 3 | 573 | 1 |
| IPI | 8 | 3665 | -5 |
| Average | 3.5 | 1289 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.5 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $19 million in SLNO’s case. Intrepid Potash, Inc. (NYSE:IPI) is the most popular stock in this table. On the other hand B Communications Ltd (NASDAQ:BCOM) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Soleno Therapeutics, Inc. (NASDAQ:SLNO) 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 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. Unfortunately SLNO wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on SLNO were disappointed as the stock returned -20.2% during the second quarter (through June 22nd) 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.
Follow Soleno Therapeutics Inc (NASDAQ:SLNO)
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Disclosure: None. This article was originally published at Insider Monkey.
