Here is What Hedge Funds Think About Quotient Limited (QTNT)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Quotient Limited (NASDAQ:QTNT) based on that data.

Quotient Limited (NASDAQ:QTNT) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. Our calculations also showed that QTNT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare QTNT to other stocks including CEL-SCI Corporation (NYSE:CVM), Yunji Inc. (NASDAQ:YJ), and Red River Bancshares, Inc. (NASDAQ:RRBI) to get a better sense of its popularity.

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 79 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.

Tim Woolley of Polar Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. With all of this in mind we’re going to take a gander at the recent hedge fund action encompassing Quotient Limited (NASDAQ:QTNT).

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

At second quarter’s end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 17 hedge funds held shares or bullish call options in QTNT a year ago. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Among these funds, Perceptive Advisors held the most valuable stake in Quotient Limited (NASDAQ:QTNT), which was worth $59 million at the end of the second quarter. On the second spot was Polar Capital which amassed $33.7 million worth of shares. Highbridge Capital Management, Pura Vida Investments, and Cormorant Asset Management 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 Perceptive Advisors allocated the biggest weight to Quotient Limited (NASDAQ:QTNT), around 0.77% of its 13F portfolio. Pura Vida Investments is also relatively very bullish on the stock, dishing out 0.51 percent of its 13F equity portfolio to QTNT.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: ExodusPoint Capital. 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 Paloma Partners).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Quotient Limited (NASDAQ:QTNT) but similarly valued. These stocks are CEL-SCI Corporation (NYSE:CVM), Yunji Inc. (NASDAQ:YJ), Red River Bancshares, Inc. (NASDAQ:RRBI), NexImmune, Inc. (NASDAQ:NEXI), Del Taco Restaurants Inc (NASDAQ:TACO), Lizhi Inc. (NASDAQ:LIZI), and Theratechnologies Inc. (NASDAQ:THTX). This group of stocks’ market valuations are similar to QTNT’s market valuation.

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As you can see these stocks had an average of 6.1 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $133 million in QTNT’s case. Del Taco Restaurants Inc (NASDAQ:TACO) is the most popular stock in this table. On the other hand Yunji Inc. (NASDAQ:YJ) is the least popular one with only 3 bullish hedge fund positions. Quotient Limited (NASDAQ:QTNT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for QTNT is 51.5. 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 25.7% in 2021 through September 27th and beat the market again by 6.2 percentage points. Unfortunately QTNT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on QTNT were disappointed as the stock returned -29.9% since the end of June (through 9/27) 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.

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