We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Avenue Therapeutics, Inc. (NASDAQ:ATXI) based on that data.
Avenue Therapeutics, Inc. (NASDAQ:ATXI) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds’ portfolios at the end of March. At the end of this article we will also compare ATXI to other stocks including Pulse Biosciences, Inc (NASDAQ:PLSE), BayCom Corp (NASDAQ:BCML), and Fortress Biotech Inc (NASDAQ:FBIO) to get a better sense of its popularity.
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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 monthly stock picks returned 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 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.
Israel Englander of Millennium Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s review the key hedge fund action surrounding Avenue Therapeutics, Inc. (NASDAQ:ATXI).
What does smart money think about Avenue Therapeutics, Inc. (NASDAQ:ATXI)?
At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 2 hedge funds with a bullish position in ATXI a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Opaleye Management was the largest shareholder of Avenue Therapeutics, Inc. (NASDAQ:ATXI), with a stake worth $9.3 million reported as of the end of September. Trailing Opaleye Management was Millennium Management, which amassed a stake valued at $0.6 million. Renaissance Technologies was 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 Opaleye Management allocated the biggest weight to Avenue Therapeutics, Inc. (NASDAQ:ATXI), around 2.45% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, dishing out 0.0014 percent of its 13F equity portfolio to ATXI.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: 683 Capital Partners. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Millennium Management).
Let’s also examine hedge fund activity in other stocks similar to Avenue Therapeutics, Inc. (NASDAQ:ATXI). These stocks are Pulse Biosciences, Inc (NASDAQ:PLSE), BayCom Corp (NASDAQ:BCML), Fortress Biotech Inc (NASDAQ:FBIO), and American Realty Investors, Inc. (NYSE:ARL). This group of stocks’ market caps are similar to ATXI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PLSE | 2 | 197 | 1 |
| BCML | 6 | 16628 | 0 |
| FBIO | 5 | 5655 | -3 |
| ARL | 1 | 303 | 0 |
| Average | 3.5 | 5696 | -0.5 |
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 $6 million. That figure was $10 million in ATXI’s case. BayCom Corp (NASDAQ:BCML) is the most popular stock in this table. On the other hand American Realty Investors, Inc. (NYSE:ARL) is the least popular one with only 1 bullish hedge fund positions. Avenue Therapeutics, Inc. (NASDAQ:ATXI) is not the least popular stock in this group but hedge fund interest is still below average. 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 7.9% in 2020 through May 22nd but beat the market by 15.6 percentage points. A small number of hedge funds were also right about betting on ATXI, though not to the same extent, as the stock returned 20% during the second quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.