Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards Adaptimmune Therapeutics PLC – ADR (NASDAQ:ADAP).
Adaptimmune Therapeutics’ stock has lost 39% since the beginning of the year and it was in 12 hedge funds’ portfolios at the end of September. However, ADAP investors should be aware of a decrease in hedge fund interest recently. There were 16 hedge funds in our database with ADAP positions at the end of the previous quarter. At the end of this article we will also compare ADAP to other stocks, including SL Industries, Inc. (NYSEMKT:SLI), Violin Memory Inc (NYSE:VMEM), and Collectors Universe, Inc. (NASDAQ:CLCT) to get a better sense of its popularity.
According to most market participants, hedge funds are seen as worthless, outdated financial vehicles of years past. While there are more than 8000 funds in operation at the moment, Our experts look at the bigwigs of this club, about 700 funds. These money managers oversee most of all hedge funds’ total capital, and by tracking their finest equity investments, Insider Monkey has revealed several investment strategies that have historically outpaced the broader indices. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Now, we’re going to take a gander at the new action surrounding Adaptimmune Therapeutics PLC – ADR (NASDAQ:ADAP).
What have hedge funds been doing with Adaptimmune Therapeutics PLC – ADR (NASDAQ:ADAP)?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 25% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Christopher James’ Partner Fund Management has the largest position in Adaptimmune Therapeutics PLC – ADR (NASDAQ:ADAP), worth close to $12 million, amounting to 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Rock Springs Capital Management, managed by Kris Jenner, Gordon Bussard, Graham McPhail, which holds a $9.1 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Remaining peers with similar optimism consist of Ken Griffin’s Citadel Investment Group, Phill Gross and Robert Atchinson’s Adage Capital Management, and Daniel Gold’s QVT Financial.
Judging by the fact that Adaptimmune Therapeutics PLC – ADR (NASDAQ:ADAP) has experienced a decline in interest from the smart money, it’s easy to see that there were a few fund managers that elected to cut their positions entirely in the third quarter. At the top of the heap, Nick Niell’s Arrowgrass Capital Partners cut the biggest investment of the 700 funds monitored by Insider Monkey, valued at an estimated $8.8 million in stock, and Thomas Steyer’s Farallon Capital was right behind this move, as the fund dumped about $4.6 million worth. These moves are important to note, as total hedge fund interest was cut by 4 funds in the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Adaptimmune Therapeutics PLC – ADR (NASDAQ:ADAP) but similarly valued. We will take a look at SL Industries, Inc. (NYSEMKT:SLI), Violin Memory Inc (NYSE:VMEM), Collectors Universe, Inc. (NASDAQ:CLCT), and Dixie Group Inc (NASDAQ:DXYN). This group of stocks’ market valuations match ADAP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SLI | 6 | 47332 | 0 |
| VMEM | 7 | 8724 | -4 |
| CLCT | 5 | 15199 | 1 |
| DXYN | 5 | 16911 | -1 |
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $46 million in ADAP’s case. Violin Memory Inc (NYSE:VMEM) is the most popular stock in this table. On the other hand Collectors Universe, Inc. (NASDAQ:CLCT) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Adaptimmune Therapeutics PLC – ADR (NASDAQ:ADAP) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.