The market has been volatile in the last few months as the Federal Reserve finalized its rate cuts and uncertainty looms over trade negotiations with China. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points over the last 12 months. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure since summer months, though some funds increased their exposure dramatically at the end of Q3 and the beginning of Q4. In this article, we analyze what the smart money thinks of Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) and find out how it is affected by hedge funds’ moves.
Is Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) a healthy stock for your portfolio? Money managers are becoming less hopeful. The number of long hedge fund positions went down by 1 recently. Our calculations also showed that PIRS 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.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Kerr Neilson of Platinum Asset 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 take a look at the new hedge fund action regarding Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS).
What does smart money think about Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS)?
Heading into the fourth quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the previous quarter. On the other hand, there were a total of 18 hedge funds with a bullish position in PIRS a year ago. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Among these funds, Biotechnology Value Fund held the most valuable stake in Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS), which was worth $18.2 million at the end of the third quarter. On the second spot was Aquilo Capital Management which amassed $10.1 million worth of shares. Renaissance Technologies, Platinum Asset Management, and 683 Capital Partners 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 Aquilo Capital Management allocated the biggest weight to Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS), around 7.1% of its 13F portfolio. Biotechnology Value Fund is also relatively very bullish on the stock, earmarking 1.92 percent of its 13F equity portfolio to PIRS.
Seeing as Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there is a sect of money managers who sold off their entire stakes by the end of the third quarter. Intriguingly, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management cut the biggest investment of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $6.9 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund sold off about $1.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS). These stocks are Hill International Inc (NYSE:HIL), SandRidge Energy Inc. (NYSE:SD), Pingtan Marine Enterprise Ltd. (NASDAQ:PME), and IMPAC Mortgage Holdings, Inc (NYSEAMERICAN:IMH). This group of stocks’ market values are similar to PIRS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HIL | 12 | 49032 | 2 |
| SD | 18 | 53114 | 0 |
| PME | 2 | 54 | 1 |
| IMH | 5 | 1546 | 1 |
| Average | 9.25 | 25937 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $39 million in PIRS’s case. SandRidge Energy Inc. (NYSE:SD) is the most popular stock in this table. On the other hand Pingtan Marine Enterprise Ltd. (NASDAQ:PME) is the least popular one with only 2 bullish hedge fund positions. Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on PIRS as the stock returned 19.4% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
