Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Lipocine Inc (NASDAQ:LPCN).
Lipocine Inc (NASDAQ:LPCN) has seen a decrease in hedge fund interest lately. Lipocine Inc (NASDAQ:LPCN) was in 3 hedge funds’ portfolios at the end of September. The all time high for this statistics is 12. There were 4 hedge funds in our database with LPCN holdings at the end of June. Our calculations also showed that LPCN isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
According to most traders, hedge funds are perceived as slow, old investment vehicles of yesteryear. While there are over 8000 funds in operation at present, Our researchers look at the aristocrats of this club, about 850 funds. Most estimates calculate that this group of people direct the lion’s share of the hedge fund industry’s total capital, and by observing their top equity investments, Insider Monkey has revealed numerous investment strategies that have historically outrun the market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
John Overdeck of Two Sigma Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website. Now let’s check out the fresh hedge fund action regarding Lipocine Inc (NASDAQ:LPCN).
What does smart money think about Lipocine Inc (NASDAQ:LPCN)?
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards LPCN over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Sabby Capital held the most valuable stake in Lipocine Inc (NASDAQ:LPCN), which was worth $0.6 million at the end of the third quarter. On the second spot was Sabby Capital which amassed $0.1 million worth of shares. Citadel Investment Group 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 Sabby Capital allocated the biggest weight to Lipocine Inc (NASDAQ:LPCN), around 0.09% of its 13F portfolio. Sabby Capital is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to LPCN.
Because Lipocine Inc (NASDAQ:LPCN) has faced declining sentiment from hedge fund managers, we can see that there was a specific group of hedge funds that slashed their positions entirely by the end of the third quarter. It’s worth mentioning that Renaissance Technologies dropped the biggest position of the 750 funds followed by Insider Monkey, valued at an estimated $0.4 million in stock. Israel Englander’s fund, Millennium Management, also sold off its stock, about $0.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to Lipocine Inc (NASDAQ:LPCN). These stocks are Frequency Electronics, Inc. (NASDAQ:FEIM), China Automotive Systems, Inc. (NASDAQ:CAAS), NeuroBo Pharmaceuticals, Inc. (NASDAQ:NRBO), Riverview Bancorp, Inc. (NASDAQ:RVSB), CONSOL Coal Resources LP (NYSE:CCR), California BanCorp (NASDAQ:CALB), and Charah Solutions, Inc. (NYSE:CHRA). All of these stocks’ market caps match LPCN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FEIM | 4 | 9778 | 0 |
| CAAS | 1 | 1503 | 0 |
| NRBO | 2 | 1406 | -1 |
| RVSB | 10 | 4842 | 1 |
| CCR | 2 | 18344 | 0 |
| CALB | 3 | 3468 | -1 |
| CHRA | 3 | 15167 | -3 |
| Average | 3.6 | 7787 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.6 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $1 million in LPCN’s case. Riverview Bancorp, Inc. (NASDAQ:RVSB) is the most popular stock in this table. On the other hand China Automotive Systems, Inc. (NASDAQ:CAAS) is the least popular one with only 1 bullish hedge fund positions. Lipocine Inc (NASDAQ:LPCN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LPCN is 22.6. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on LPCN as the stock returned 12.1% since the end of the third quarter (through 11/23) and outperformed the market by an even larger margin.
Follow Lipocine Inc. (NASDAQ:LPCN)
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Disclosure: None. This article was originally published at Insider Monkey.
