Is ADMA Biologics Inc (ADMA) A Good Stock To Buy?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded ADMA Biologics Inc (NASDAQ:ADMA) based on those filings.

Is ADMA a good stock to buy? Investors who are in the know were in an optimistic mood. The number of bullish hedge fund positions inched up by 1 in recent months. ADMA Biologics Inc (NASDAQ:ADMA) was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 21. Our calculations also showed that ADMA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 9 hedge funds in our database with ADMA holdings at the end of March.

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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Alex Litowitz of Magnetar Capital

With all of this in mind we’re going to analyze the recent hedge fund action encompassing ADMA Biologics Inc (NASDAQ:ADMA).

Do Hedge Funds Think ADMA Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. On the other hand, there were a total of 21 hedge funds with a bullish position in ADMA a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Perceptive Advisors, managed by Joseph Edelman, holds the most valuable position in ADMA Biologics Inc (NASDAQ:ADMA). Perceptive Advisors has a $26.5 million position in the stock, comprising 0.3% of its 13F portfolio. The second largest stake is held by Israel Englander of Millennium Management, with a $1.6 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other members of the smart money that are bullish include Marc Majzner’s Clearline Capital, Alec Litowitz and Ross Laser’s Magnetar Capital and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors. In terms of the portfolio weights assigned to each position Perceptive Advisors allocated the biggest weight to ADMA Biologics Inc (NASDAQ:ADMA), around 0.34% of its 13F portfolio. Clearline Capital is also relatively very bullish on the stock, dishing out 0.22 percent of its 13F equity portfolio to ADMA.

As one would reasonably expect, some big names have jumped into ADMA Biologics Inc (NASDAQ:ADMA) headfirst. Millennium Management, managed by Israel Englander, created the most valuable position in ADMA Biologics Inc (NASDAQ:ADMA). Millennium Management had $1.6 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also made a $0.3 million investment in the stock during the quarter. The other funds with brand new ADMA positions are Renaissance Technologies and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ADMA Biologics Inc (NASDAQ:ADMA) but similarly valued. We will take a look at Summit Midstream Partners LP (NYSE:SMLP), International Tower Hill Mines Ltd (NYSE:THM), Pacific Mercantile Bancorp (NASDAQ:PMBC), Aqua Metals, Inc. (NASDAQ:AQMS), IntriCon Corporation (NASDAQ:IIN), O2Micro International Limited (NASDAQ:OIIM), and Synlogic, Inc. (NASDAQ:SYBX). This group of stocks’ market values are closest to ADMA’s market value.

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As you can see these stocks had an average of 5.1 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $32 million in ADMA’s case. Synlogic, Inc. (NASDAQ:SYBX) is the most popular stock in this table. On the other hand Summit Midstream Partners LP (NYSE:SMLP) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks ADMA Biologics Inc (NASDAQ:ADMA) is more popular among hedge funds. Our overall hedge fund sentiment score for ADMA is 70.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. Unfortunately ADMA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ADMA were disappointed as the stock returned -23.1% since the end of the second quarter (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.