It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in ProQR Therapeutics NV (NASDAQ:PRQR).
ProQR Therapeutics NV (NASDAQ:PRQR) has experienced a decrease in activity from the world’s largest hedge funds of late. There were 7 hedge funds in our database with PRQR positions at the end of the second quarter, which fell to 6 a quarter later. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Lawson Products, Inc. (NASDAQ:LAWS), Black Diamond Inc (NASDAQ:BDE), and Proteon Therapeutics Inc (NASDAQ:PRTO) to gather more data points.
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
Pressmaster/Shutterstock.com
What does the smart money think about ProQR Therapeutics NV (NASDAQ:PRQR)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 14% drop from one quarter earlier, and the fourth-straight quarter in which hedge fund ownership of the stock has declined. Below, you can check out the change in hedge fund sentiment towards PRQR over the last 5 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.
Of the funds tracked by Insider Monkey, OrbiMed Advisors, led by Samuel Isaly, holds the largest position in ProQR Therapeutics NV (NASDAQ:PRQR). OrbiMed Advisors has a $15.4 million position in the stock. On OrbiMed Advisors’ heels is Baker Bros. Advisors, led by Julian Baker and Felix Baker, which holds a $5.7 million position. Remaining members of the smart money that hold long positions contain Jeremy Green’s Redmile Group, James Dondero’s Highland Capital Management, and Millennium Management, one of the largest hedge funds in the world. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.
We view hedge fund activity in the stock as unfavorable, but in this case there was only a single hedge fund selling its entire position: Renaissance Technologies. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 700+ hedge funds tracked by Insider Monkey identified PRQR as a viable investment and initiated a position in the stock.
Let’s also examine hedge fund activity in other stocks similar to ProQR Therapeutics NV (NASDAQ:PRQR). We will take a look at Lawson Products, Inc. (NASDAQ:LAWS), Black Diamond Inc (NASDAQ:BDE), Proteon Therapeutics Inc (NASDAQ:PRTO), and Republic First Bancorp, Inc. (NASDAQ:FRBK). This group of stocks’ market caps resemble PRQR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LAWS | 3 | 4752 | -1 |
| BDE | 10 | 17315 | -1 |
| PRTO | 4 | 35127 | -1 |
| FRBK | 4 | 15019 | 1 |
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $28 million in PRQR’s case. Black Diamond Inc (NASDAQ:BDE) is the most popular stock in this table. On the other hand Lawson Products, Inc. (NASDAQ:LAWS) is the least popular one with only 3 bullish hedge fund positions. ProQR Therapeutics NV (NASDAQ:PRQR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BDE might be a better candidate to consider taking a long position in.
Disclosure: None
