Reputable billionaire investors such as Jim Simons, Cliff Asness and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
ObsEva SA (NASDAQ:OBSV) has seen a decrease in hedge fund interest recently. OBSV was in 11 hedge funds’ portfolios at the end of December. There were 13 hedge funds in our database with OBSV positions at the end of the previous quarter. Our calculations also showed that obsv isn’t among the 30 most popular stocks among hedge funds.
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’ 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.
Let’s review the key hedge fund action regarding ObsEva SA (NASDAQ:OBSV).
Hedge fund activity in ObsEva SA (NASDAQ:OBSV)
Heading into the first quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OBSV over the last 14 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.
The largest stake in ObsEva SA (NASDAQ:OBSV) was held by OrbiMed Advisors, which reported holding $33 million worth of stock at the end of December. It was followed by Rock Springs Capital Management with a $14.2 million position. Other investors bullish on the company included Vivo Capital, Sectoral Asset Management, and Ghost Tree Capital.
Since ObsEva SA (NASDAQ:OBSV) has faced falling interest from hedge fund managers, it’s easy to see that there exists a select few money managers that elected to cut their full holdings in the third quarter. Intriguingly, Benjamin A. Smith’s Laurion Capital Management cut the biggest position of the 700 funds monitored by Insider Monkey, worth an estimated $1.3 million in stock. Efrem Kamen’s fund, Pura Vida Investments, also dumped its stock, about $0.9 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 2 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to ObsEva SA (NASDAQ:OBSV). We will take a look at Modine Manufacturing Company (NYSE:MOD), Viking Therapeutics, Inc. (NASDAQ:VKTX), pdvWireless Inc (NASDAQ:PDVW), and Omeros Corporation (NASDAQ:OMER). All of these stocks’ market caps are closest to OBSV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MOD | 17 | 59798 | -1 |
| VKTX | 20 | 56464 | -7 |
| PDVW | 12 | 259922 | 3 |
| OMER | 7 | 40210 | -1 |
| Average | 14 | 104099 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $104 million. That figure was $79 million in OBSV’s case. Viking Therapeutics, Inc. (NASDAQ:VKTX) is the most popular stock in this table. On the other hand Omeros Corporation (NASDAQ:OMER) is the least popular one with only 7 bullish hedge fund positions. ObsEva SA (NASDAQ:OBSV) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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. Unfortunately OBSV wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); OBSV investors were disappointed as the stock returned 7.7% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
