Is ZIOPHARM Oncology Inc. (NASDAQ:ZIOP) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
ZIOPHARM Oncology Inc. (NASDAQ:ZIOP) has experienced an increase in activity from the world’s largest hedge funds in recent months. Our calculations also showed that ZIOP 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.
Bill Miller of Miller Value Partners
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 take a look at the key hedge fund action surrounding ZIOPHARM Oncology Inc. (NASDAQ:ZIOP).
What does smart money think about ZIOPHARM Oncology Inc. (NASDAQ:ZIOP)?
At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards ZIOP over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, MSDC Management held the most valuable stake in ZIOPHARM Oncology Inc. (NASDAQ:ZIOP), which was worth $64.8 million at the end of the third quarter. On the second spot was Miller Value Partners which amassed $55.6 million worth of shares. Discovery Capital Management, Millennium Management, and Unio 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 MSDC Management allocated the biggest weight to ZIOPHARM Oncology Inc. (NASDAQ:ZIOP), around 8.7% of its 13F portfolio. Discovery Capital Management is also relatively very bullish on the stock, dishing out 3 percent of its 13F equity portfolio to ZIOP.
As aggregate interest increased, specific money managers were leading the bulls’ herd. AQR Capital Management, managed by Cliff Asness, established the most outsized position in ZIOPHARM Oncology Inc. (NASDAQ:ZIOP). AQR Capital Management had $0.2 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also made a $0.2 million investment in the stock during the quarter. The other funds with new positions in the stock are David Cohen and Harold Levy’s Iridian Asset Management, Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and Andre F. Perold’s HighVista Strategies.
Let’s go over hedge fund activity in other stocks similar to ZIOPHARM Oncology Inc. (NASDAQ:ZIOP). We will take a look at ScanSource, Inc. (NASDAQ:SCSC), Dime Community Bancshares, Inc. (NASDAQ:DCOM), William Lyon Homes (NYSE:WLH), and PetIQ, Inc. (NASDAQ:PETQ). This group of stocks’ market caps resemble ZIOP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SCSC | 11 | 52810 | 3 |
| DCOM | 10 | 41957 | 1 |
| WLH | 29 | 164043 | 5 |
| PETQ | 16 | 96449 | 3 |
| Average | 16.5 | 88815 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $142 million in ZIOP’s case. William Lyon Homes (NYSE:WLH) is the most popular stock in this table. On the other hand Dime Community Bancshares, Inc. (NASDAQ:DCOM) is the least popular one with only 10 bullish hedge fund positions. ZIOPHARM Oncology Inc. (NASDAQ:ZIOP) is not the least popular stock in this group but hedge fund interest is still below 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. A small number of hedge funds were also right about betting on ZIOP as the stock returned 21.7% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
