“Market volatility has picked up again over the past few weeks. Headlines highlight risks regarding interest rates, the Fed, China, house prices, auto sales, trade wars, and more. Uncertainty abounds. But doesn’t it always? I have no view on whether the recent volatility will continue for a while, or whether the market will be back at all-time highs before we know it. I remain focused on preserving and growing our capital, and continue to believe that the best way to do so is via a value-driven, concentrated, patient approach. I shun consensus holdings, rich valuations, and market fads, in favor of solid, yet frequently off-the-beaten-path, businesses run by excellent, aligned management teams, purchased at deep discounts to intrinsic value,” are the words of Maran Capital’s Dan Roller. His stock picks have been beating the S&P 500 Index handily. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards AVROBIO, Inc. (NASDAQ:AVRO) and see how it was affected.
AVROBIO, Inc. (NASDAQ:AVRO) shareholders have witnessed a decrease in support from the world’s most elite money managers in recent months. AVRO was in 6 hedge funds’ portfolios at the end of December. There were 14 hedge funds in our database with AVRO positions at the end of the previous quarter. Our calculations also showed that AVRO isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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 market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to analyze the latest hedge fund action encompassing AVROBIO, Inc. (NASDAQ:AVRO).
What have hedge funds been doing with AVROBIO, Inc. (NASDAQ:AVRO)?
At the end of the fourth quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -57% from the second quarter of 2018. On the other hand, there were a total of 0 hedge funds with a bullish position in AVRO a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Ken Griffin’s Citadel Investment Group has the most valuable position in AVROBIO, Inc. (NASDAQ:AVRO), worth close to $22.7 million, accounting for less than 0.1%% of its total 13F portfolio. On Citadel Investment Group’s heels is Cormorant Asset Management, led by Bihua Chen, holding a $22.6 million position; 1.8% of its 13F portfolio is allocated to the stock. Some other professional money managers with similar optimism encompass Thomas Steyer’s Farallon Capital, Samuel Isaly’s OrbiMed Advisors and Christopher James’s Partner Fund Management.
Seeing as AVROBIO, Inc. (NASDAQ:AVRO) has witnessed a decline in interest from the smart money, logic holds that there were a few hedgies that decided to sell off their entire stakes by the end of the third quarter. At the top of the heap, Israel Englander’s Millennium Management dumped the biggest stake of the “upper crust” of funds watched by Insider Monkey, totaling close to $18.2 million in stock, and Zach Schreiber’s Point State Capital was right behind this move, as the fund cut about $5.6 million worth. These moves are interesting, as aggregate hedge fund interest fell by 8 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to AVROBIO, Inc. (NASDAQ:AVRO). We will take a look at Anworth Mortgage Asset Corporation (NYSE:ANH), Quotient Limited (NASDAQ:QTNT), New Frontier Corp (NYSE:NFC), and U.S. Lime & Minerals Inc. (NASDAQ:USLM). This group of stocks’ market values resemble AVRO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ANH | 9 | 26269 | 3 |
| QTNT | 19 | 203487 | 0 |
| NFC | 14 | 67411 | -1 |
| USLM | 2 | 16994 | -2 |
| Average | 11 | 78540 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $79 million. That figure was $67 million in AVRO’s case. Quotient Limited (NASDAQ:QTNT) is the most popular stock in this table. On the other hand U.S. Lime & Minerals Inc. (NASDAQ:USLM) is the least popular one with only 2 bullish hedge fund positions. AVROBIO, Inc. (NASDAQ:AVRO) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on AVRO, though not to the same extent, as the stock returned 17.8% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
