Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the third quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds’ top consensus picks. This year hedge funds’ top 20 stock picks outperformed the S&P 500 Index by 9.9 percentage points through the end of November. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Is VBI Vaccines, Inc. (NASDAQ:VBIV) a first-rate investment now? The best stock pickers are taking a bullish view. The number of long hedge fund positions inched up by 6 recently. Our calculations also showed that VBIV isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
David Harding of Winton Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds‘ buy/sell signals. We’re going to go over the key hedge fund action regarding VBI Vaccines, Inc. (NASDAQ:VBIV).
Hedge fund activity in VBI Vaccines, Inc. (NASDAQ:VBIV)
At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 200% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in VBIV a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
More specifically, Perceptive Advisors was the largest shareholder of VBI Vaccines, Inc. (NASDAQ:VBIV), with a stake worth $46 million reported as of the end of September. Trailing Perceptive Advisors was 683 Capital Partners, which amassed a stake valued at $0.9 million. Alyeska Investment Group, Sabby Capital, and ExodusPoint Capital 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 Perceptive Advisors allocated the biggest weight to VBI Vaccines, Inc. (NASDAQ:VBIV), around 1.24% of its 13F portfolio. Sabby Capital is also relatively very bullish on the stock, designating 0.22 percent of its 13F equity portfolio to VBIV.
Now, specific money managers have been driving this bullishness. 683 Capital Partners, managed by Ari Zweiman, established the largest position in VBI Vaccines, Inc. (NASDAQ:VBIV). 683 Capital Partners had $0.9 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $0.7 million position during the quarter. The following funds were also among the new VBIV investors: Hal Mintz’s Sabby Capital, Michael Gelband’s ExodusPoint Capital, and David Harding’s Winton Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to VBI Vaccines, Inc. (NASDAQ:VBIV). These stocks are Selecta Biosciences, Inc. (NASDAQ:SELB), Postal Realty Trust, Inc. (NYSE:PSTL), Iterum Therapeutics plc (NASDAQ:ITRM), and Great Elm Capital Corp. (NASDAQ:GECC). This group of stocks’ market values match VBIV’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SELB | 9 | 14294 | 1 |
| PSTL | 7 | 20025 | -2 |
| ITRM | 3 | 11366 | 0 |
| GECC | 3 | 1592 | -1 |
| Average | 5.5 | 11819 | -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 $12 million. That figure was $48 million in VBIV’s case. Selecta Biosciences, Inc. (NASDAQ:SELB) is the most popular stock in this table. On the other hand Iterum Therapeutics plc (NASDAQ:ITRM) is the least popular one with only 3 bullish hedge fund positions. VBI Vaccines, Inc. (NASDAQ:VBIV) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on VBIV as the stock returned 90.6% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
