Here is What Hedge Funds Think About Silverback Therapeutics, Inc. (SBTX)

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 Silverback Therapeutics, Inc. (NASDAQ:SBTX).

Hedge fund interest in Silverback Therapeutics, Inc. (NASDAQ:SBTX) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that SBTX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as National HealthCare Corporation (NYSE:NHC), Meridian Bancorp, Inc. (NASDAQ:EBSB), and Anterix Inc. (NASDAQ:ATEX) to gather more data points.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Oleg Nodelman of EcoR1 Capital

Now let’s check out the fresh hedge fund action surrounding Silverback Therapeutics, Inc. (NASDAQ:SBTX).

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

At the end of the second quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in SBTX a year ago. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, OrbiMed Advisors has the largest position in Silverback Therapeutics, Inc. (NASDAQ:SBTX), worth close to $270 million, comprising 2.7% of its total 13F portfolio. Sitting at the No. 2 spot is Oleg Nodelman of EcoR1 Capital, with a $80.9 million position; the fund has 3% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish contain Peter Kolchinsky’s RA Capital Management, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management and Michael Rockefeller and KarláKroeker’s Woodline Partners. In terms of the portfolio weights assigned to each position EcoR1 Capital allocated the biggest weight to Silverback Therapeutics, Inc. (NASDAQ:SBTX), around 3.02% of its 13F portfolio. OrbiMed Advisors is also relatively very bullish on the stock, earmarking 2.73 percent of its 13F equity portfolio to SBTX.

Because Silverback Therapeutics, Inc. (NASDAQ:SBTX) has experienced falling interest from the aggregate hedge fund industry, we can see that there were a few hedge funds that elected to cut their entire stakes in the second quarter. Intriguingly, Arsani William’s Logos Capital sold off the largest investment of the “upper crust” of funds watched by Insider Monkey, comprising close to $5.5 million in stock, and Anand Parekh’s Alyeska Investment Group was right behind this move, as the fund dumped about $1.1 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Silverback Therapeutics, Inc. (NASDAQ:SBTX). We will take a look at National HealthCare Corporation (NYSE:NHC), Meridian Bancorp, Inc. (NASDAQ:EBSB), Anterix Inc. (NASDAQ:ATEX), IES Holdings, Inc. (NASDAQ:IESC), OptimizeRx Corporation (NASDAQ:OPRX), Saul Centers Inc (NYSE:BFS), and General American Investors Company, Inc. (NYSE:GAM). All of these stocks’ market caps match SBTX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.9 hedge funds with bullish positions and the average amount invested in these stocks was $202 million. That figure was $508 million in SBTX’s case. Anterix Inc. (NASDAQ:ATEX) is the most popular stock in this table. On the other hand General American Investors Company, Inc. (NYSE:GAM) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Silverback Therapeutics, Inc. (NASDAQ:SBTX) is more popular among hedge funds. Our overall hedge fund sentiment score for SBTX is 78.8. 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 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Unfortunately SBTX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SBTX were disappointed as the stock returned -70.2% since the end of the second quarter (through 10/22) 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 most of these stocks already outperformed the market since 2019.

Suggested Articles:

• 13 Stocks that Best Performing Hedge Funds are Piling Into
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• Cathie Wood’s Top 10 Stock Picks

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