Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Aerpio Pharmaceuticals, Inc. (NASDAQ:ARPO).
Is Aerpio Pharmaceuticals, Inc. (NASDAQ:ARPO) a buy, sell, or hold? Hedge funds are taking a bullish view. The number of bullish hedge fund positions went up by 1 in recent months. Our calculations also showed that ARPO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). ARPO was in 3 hedge funds’ portfolios at the end of the first quarter of 2020. There were 2 hedge funds in our database with ARPO positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Samuel Isaly of OrbiMed Advisors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a glance at the new hedge fund action surrounding Aerpio Pharmaceuticals, Inc. (NASDAQ:ARPO).
Hedge fund activity in Aerpio Pharmaceuticals, Inc. (NASDAQ:ARPO)
At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the previous quarter. On the other hand, there were a total of 2 hedge funds with a bullish position in ARPO a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Aerpio Pharmaceuticals, Inc. (NASDAQ:ARPO) was held by OrbiMed Advisors, which reported holding $2.9 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $0.2 million position. The only other hedge fund that is bullish on the company was Citadel Investment Group.
Consequently, key hedge funds have jumped into Aerpio Pharmaceuticals, Inc. (NASDAQ:ARPO) headfirst. Citadel Investment Group, managed by Ken Griffin, assembled the most valuable position in Aerpio Pharmaceuticals, Inc. (NASDAQ:ARPO). Citadel Investment Group had $0 million invested in the company at the end of the quarter.
Let’s also examine hedge fund activity in other stocks similar to Aerpio Pharmaceuticals, Inc. (NASDAQ:ARPO). These stocks are Microvision, Inc. (NASDAQ:MVIS), Nuverra Environmental Solutions Inc (NYSE:NES), China Pharma Holdings, Inc. (NYSE:CPHI), and Medley Management Inc (NYSE:MDLY). This group of stocks’ market values match ARPO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MVIS | 2 | 35 | 0 |
| NES | 4 | 9964 | -1 |
| CPHI | 2 | 490 | 0 |
| MDLY | 3 | 600 | -1 |
| Average | 2.75 | 2772 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.75 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $3 million in ARPO’s case. Nuverra Environmental Solutions Inc (NYSE:NES) is the most popular stock in this table. On the other hand Microvision, Inc. (NASDAQ:MVIS) is the least popular one with only 2 bullish hedge fund positions. Aerpio Pharmaceuticals, Inc. (NASDAQ:ARPO) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but still beat the market by 15.6 percentage points. Hedge funds were also right about betting on ARPO as the stock returned 41.8% in Q2 (through May 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
