The first quarter was a breeze as Powell pivoted, and China seemed eager to reach a deal with Trump. Both the S&P 500 and Russell 2000 delivered very strong gains as a result, with the Russell 2000, which is composed of smaller companies, outperforming the large-cap stocks slightly during the first quarter. Unfortunately sentiment shifted in May and August as this time China pivoted and Trump put more pressure on China by increasing tariffs. Fourth quarter brought optimism to the markets and hedge funds’ top 20 stock picks performed spectacularly in this volatile environment. These stocks delivered a total gain of 37.4% through the end of November, vs. a gain of 27.5% for the S&P 500 ETF. In this article we will look at how this market volatility affected the sentiment of hedge funds towards Spring Bank Pharmaceuticals, Inc. (NASDAQ:SBPH), and what that likely means for the prospects of the company and its stock.
Spring Bank Pharmaceuticals, Inc. (NASDAQ:SBPH) has experienced an increase in enthusiasm from smart money recently. Our calculations also showed that SBPH 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.
According to most traders, hedge funds are viewed as underperforming, outdated investment vehicles of years past. While there are greater than 8000 funds with their doors open at present, We hone in on the masters of this club, around 750 funds. These investment experts manage bulk of the hedge fund industry’s total asset base, and by shadowing their inimitable equity investments, Insider Monkey has determined 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 May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Phill Gross of Adage Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds‘ buy/sell signals. Let’s analyze the new hedge fund action surrounding Spring Bank Pharmaceuticals, Inc. (NASDAQ:SBPH).
How are hedge funds trading Spring Bank Pharmaceuticals, Inc. (NASDAQ:SBPH)?
At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SBPH over the last 17 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Adage Capital Management was the largest shareholder of Spring Bank Pharmaceuticals, Inc. (NASDAQ:SBPH), with a stake worth $4.9 million reported as of the end of September. Trailing Adage Capital Management was Biotechnology Value Fund, which amassed a stake valued at $4.8 million. Baker Bros. Advisors, Sectoral Asset Management, and Alyeska Investment Group 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 Biotechnology Value Fund allocated the biggest weight to Spring Bank Pharmaceuticals, Inc. (NASDAQ:SBPH), around 0.51% of its 13F portfolio. Sectoral Asset Management is also relatively very bullish on the stock, setting aside 0.16 percent of its 13F equity portfolio to SBPH.
There weren’t any hedge funds initiating brand new positions in the stock during the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Spring Bank Pharmaceuticals, Inc. (NASDAQ:SBPH) but similarly valued. We will take a look at Motus GI Holdings, Inc. (NASDAQ:MOTS), First Seacoast Bancorp (NASDAQ:FSEA), North European Oil Royalty (NYSE:NRT), and CSP Inc. (NASDAQ:CSPI). This group of stocks’ market valuations are closest to SBPH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MOTS | 10 | 13588 | 1 |
| FSEA | 3 | 2481 | 3 |
| NRT | 1 | 1412 | -1 |
| CSPI | 1 | 3419 | 0 |
| Average | 3.75 | 5225 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.75 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $14 million in SBPH’s case. Motus GI Holdings, Inc. (NASDAQ:MOTS) is the most popular stock in this table. On the other hand North European Oil Royalty (NYSE:NRT) is the least popular one with only 1 bullish hedge fund positions. Spring Bank Pharmaceuticals, Inc. (NASDAQ:SBPH) 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 SBPH as the stock returned 26.2% 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.
