The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Assembly Biosciences Inc (NASDAQ:ASMB) based on those filings.
Assembly Biosciences Inc (NASDAQ:ASMB) shareholders have witnessed a decrease in activity from the world’s largest hedge funds lately. Our calculations also showed that ASMB 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Oleg Nodelman of EcoR1 Capital
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. 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. Keeping this in mind let’s review the fresh hedge fund action encompassing Assembly Biosciences Inc (NASDAQ:ASMB).
What does smart money think about Assembly Biosciences Inc (NASDAQ:ASMB)?
At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ASMB over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Assembly Biosciences Inc (NASDAQ:ASMB) was held by Consonance Capital Management, which reported holding $47.1 million worth of stock at the end of September. It was followed by EcoR1 Capital with a $38.4 million position. Other investors bullish on the company included Baker Bros. Advisors, Rock Springs Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position EcoR1 Capital allocated the biggest weight to Assembly Biosciences Inc (NASDAQ:ASMB), around 4.01% of its 13F portfolio. Consonance Capital Management is also relatively very bullish on the stock, dishing out 3.51 percent of its 13F equity portfolio to ASMB.
Because Assembly Biosciences Inc (NASDAQ:ASMB) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there exists a select few money managers that slashed their positions entirely heading into Q4. Intriguingly, Arsani William’s Logos Capital cut the biggest stake of all the hedgies monitored by Insider Monkey, totaling an estimated $3.8 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund dumped about $2.9 million worth. These transactions are interesting, as total hedge fund interest fell by 2 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks similar to Assembly Biosciences Inc (NASDAQ:ASMB). We will take a look at Century Communities, Inc (NYSE:CCS), Innate Pharma S.A. (NASDAQ:IPHA), Canaan Inc. (NASDAQ:CAN), and Genesis Energy, L.P. (NYSE:GEL). This group of stocks’ market values resemble ASMB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CCS | 17 | 56037 | -6 |
| IPHA | 4 | 39880 | 0 |
| CAN | 3 | 740 | 1 |
| GEL | 4 | 7087 | 3 |
| Average | 7 | 25936 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $179 million in ASMB’s case. Century Communities, Inc (NYSE:CCS) is the most popular stock in this table. On the other hand Canaan Inc. (NASDAQ:CAN) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Assembly Biosciences Inc (NASDAQ:ASMB) 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 returned 13.4% in 2020 through June 22nd but still managed to beat the market by 15.9 percentage points. Hedge funds were also right about betting on ASMB as the stock returned 54.6% so far in Q2 (through June 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
