“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on Aclaris Therapeutics, Inc. (NASDAQ:ACRS) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Aclaris Therapeutics, Inc. (NASDAQ:ACRS) investors should be aware of a decrease in enthusiasm from smart money lately. ACRS was in 16 hedge funds’ portfolios at the end of March. There were 17 hedge funds in our database with ACRS positions at the end of the previous quarter. Our calculations also showed that acrs isn’t among the 30 most popular stocks among hedge funds.
To most traders, hedge funds are assumed to be worthless, old financial tools of yesteryear. While there are over 8000 funds in operation today, Our experts hone in on the aristocrats of this club, around 750 funds. It is estimated that this group of investors have their hands on the lion’s share of all hedge funds’ total asset base, and by keeping an eye on their finest investments, Insider Monkey has determined a number of investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points annually since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
Let’s review the key hedge fund action encompassing Aclaris Therapeutics, Inc. (NASDAQ:ACRS).
What does smart money think about Aclaris Therapeutics, Inc. (NASDAQ:ACRS)?
Heading into the second quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in ACRS a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, James E. Flynn’s Deerfield Management has the number one position in Aclaris Therapeutics, Inc. (NASDAQ:ACRS), worth close to $35.3 million, comprising 1.4% of its total 13F portfolio. The second most bullish fund manager is Kevin Kotler of Broadfin Capital, with a $12.2 million position; 2.5% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism contain D. E. Shaw’s D E Shaw, Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management and Albert Cha and Frank Kung’s Vivo Capital.
Because Aclaris Therapeutics, Inc. (NASDAQ:ACRS) has experienced declining sentiment from hedge fund managers, it’s easy to see that there was a specific group of funds that decided to sell off their entire stakes in the third quarter. Interestingly, Oleg Nodelman’s EcoR1 Capital dumped the biggest investment of the “upper crust” of funds followed by Insider Monkey, totaling about $4.5 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also sold off its stock, about $2.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 1 funds in the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Aclaris Therapeutics, Inc. (NASDAQ:ACRS) but similarly valued. These stocks are Willis Lease Finance Corporation (NASDAQ:WLFC), Xunlei Ltd (NASDAQ:XNET), Cadiz Inc (NASDAQ:CDZI), and Acer Therapeutics Inc. (NASDAQ:ACER). This group of stocks’ market values are closest to ACRS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WLFC | 2 | 21209 | 1 |
| XNET | 6 | 1860 | 0 |
| CDZI | 7 | 42603 | 1 |
| ACER | 8 | 47926 | 2 |
| Average | 5.75 | 28400 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $106 million in ACRS’s case. Acer Therapeutics Inc. (NASDAQ:ACER) is the most popular stock in this table. On the other hand Willis Lease Finance Corporation (NASDAQ:WLFC) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Aclaris Therapeutics, Inc. (NASDAQ:ACRS) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately ACRS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ACRS were disappointed as the stock returned -14.7% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
