Here is What Hedge Funds Think About Acer Therapeutics Inc. (ACER)

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Acer Therapeutics Inc. (NASDAQ:ACER) in this article.

Acer Therapeutics Inc. (NASDAQ:ACER) was in 3 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 8. ACER has seen a decrease in activity from the world’s largest hedge funds recently. There were 4 hedge funds in our database with ACER positions at the end of the fourth quarter. Our calculations also showed that ACER isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

David Siegel of Two Sigma Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a glance at the key hedge fund action encompassing Acer Therapeutics Inc. (NASDAQ:ACER).

Do Hedge Funds Think ACER Is A Good Stock To Buy Now?

At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the previous quarter. By comparison, 3 hedge funds held shares or bullish call options in ACER a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Among these funds, Nantahala Capital Management held the most valuable stake in Acer Therapeutics Inc. (NASDAQ:ACER), which was worth $2.9 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $0.2 million worth of shares. Two Sigma Advisors 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 Nantahala Capital Management allocated the biggest weight to Acer Therapeutics Inc. (NASDAQ:ACER), around 0.08% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, setting aside 0.0002 percent of its 13F equity portfolio to ACER.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: AIGH Investment 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 Citadel Investment Group).

Let’s now review hedge fund activity in other stocks similar to Acer Therapeutics Inc. (NASDAQ:ACER). These stocks are A. H. Belo Corporation (NYSE:AHC), Global Self Storage, Inc. (NASDAQ:SELF), Lixte Biotechnology Holdings, Inc. (NASDAQ:LIXT), NetSol Technologies Inc. (NASDAQ:NTWK), Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX), Flanigan’s Enterprises, Inc. (NYSE:BDL), and PainReform Ltd. (NASDAQ:PRFX). This group of stocks’ market caps resemble ACER’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.7 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $3 million in ACER’s case. A. H. Belo Corporation (NYSE:AHC) is the most popular stock in this table. On the other hand Global Self Storage, Inc. (NASDAQ:SELF) is the least popular one with only 1 bullish hedge fund positions. Acer Therapeutics Inc. (NASDAQ:ACER) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ACER is 35.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately ACER wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ACER were disappointed as the stock returned -0.3% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.