We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees your average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Athersys, Inc. (NASDAQ:ATHX).
Even though Athersys, Inc. (NASDAQ:ATHX) shareholders have witnessed an increase in enthusiasm from smart money lately, the overall sentiment is still negative. ATHX was in 6 hedge funds’ portfolios at the end of September. There were 5 hedge funds in our database with ATHX positions at the end of the previous quarter. Our calculations also showed that ATHX 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.
If you’d ask most market participants, hedge funds are viewed as underperforming, outdated financial tools of the past. While there are over 8000 funds trading today, Our experts choose to focus on the leaders of this club, approximately 750 funds. These hedge fund managers handle most of the hedge fund industry’s total capital, and by keeping an eye on their unrivaled picks, Insider Monkey has determined numerous investment strategies that have historically surpassed the broader indices. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update.
David Harding of Winton Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We’re going to review the fresh hedge fund action encompassing Athersys, Inc. (NASDAQ:ATHX).
How have hedgies been trading Athersys, Inc. (NASDAQ:ATHX)?
Heading into the fourth quarter of 2019, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from one quarter earlier. On the other hand, there were a total of 7 hedge funds with a bullish position in ATHX a year ago. With hedge funds’ sentiment swirling, there exist a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Athersys, Inc. (NASDAQ:ATHX), with a stake worth $1.3 million reported as of the end of September. Trailing Renaissance Technologies was Winton Capital Management, which amassed a stake valued at $0.3 million. HighVista Strategies, Citadel Investment Group, and Two Sigma Advisors 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, HighVista Strategies allocated the biggest weight to Athersys, Inc. (NASDAQ:ATHX), around 0.04% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, dishing out 0.0031 percent of its 13F equity portfolio to ATHX.
Consequently, specific money managers were leading the bulls’ herd. Winton Capital Management, managed by David Harding, established the most outsized position in Athersys, Inc. (NASDAQ:ATHX). Winton Capital Management had $0.3 million invested in the company at the end of the quarter. Andre F. Perold’s HighVista Strategies also initiated a $0.1 million position during the quarter.
Let’s also examine hedge fund activity in other stocks similar to Athersys, Inc. (NASDAQ:ATHX). These stocks are Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX), Genie Energy Ltd (NYSE:GNE), Net 1 UEPS Technologies Inc (NASDAQ:UEPS), and MDC Partners Inc. (NASDAQ:MDCA). This group of stocks’ market caps matches ATHX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SNDX | 7 | 36930 | -1 |
| GNE | 12 | 10827 | 2 |
| UEPS | 12 | 68838 | 1 |
| MDCA | 13 | 39751 | -2 |
| Average | 11 | 39087 | 0 |
View the table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $2 million in ATHX’s case. MDC Partners Inc. (NASDAQ:MDCA) is the most popular stock in this table. On the other hand, Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Athersys, Inc. (NASDAQ:ATHX) is even less popular than SNDX. Hedge funds dodged a bullet by taking a bearish stance towards ATHX. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately, ATHX wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ATHX investors were disappointed as the stock returned -0.8% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large-cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
