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. Since stock returns aren’t usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Index’s returns in recent years), more than 50% of the constituents of the Standard and Poor’s 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that you’d fail to beat the market. At the same time, the 20 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated an outperformance of more than 8 percentage points so far in 2019. 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 Anika Therapeutics, Inc. (NASDAQ:ANIK).
Is Anika Therapeutics, Inc. (NASDAQ:ANIK) a cheap investment right now? Hedge funds are taking a bullish view. The number of bullish hedge fund positions increased by 1 recently. Our calculations also showed that ANIK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). ANIK was in 17 hedge funds’ portfolios at the end of the third quarter of 2019. There were 16 hedge funds in our database with ANIK holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Overdeck of Two Sigma Advisors
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to view the key hedge fund action encompassing Anika Therapeutics, Inc. (NASDAQ:ANIK).
What does smart money think about Anika Therapeutics, Inc. (NASDAQ:ANIK)?
At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the second quarter of 2019. On the other hand, there were a total of 13 hedge funds with a bullish position in ANIK a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Anika Therapeutics, Inc. (NASDAQ:ANIK) was held by Renaissance Technologies, which reported holding $26.5 million worth of stock at the end of September. It was followed by D E Shaw with a $22.4 million position. Other investors bullish on the company included Millennium Management, Two Sigma Advisors, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Diker Management allocated the biggest weight to Anika Therapeutics, Inc. (NASDAQ:ANIK), around 1.1% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, earmarking 0.28 percent of its 13F equity portfolio to ANIK.
As industrywide interest jumped, specific money managers have jumped into Anika Therapeutics, Inc. (NASDAQ:ANIK) headfirst. ExodusPoint Capital, managed by Michael Gelband, initiated the most outsized position in Anika Therapeutics, Inc. (NASDAQ:ANIK). ExodusPoint Capital had $0.5 million invested in the company at the end of the quarter. Roger Ibbotson’s Zebra Capital Management also made a $0.3 million investment in the stock during the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Anika Therapeutics, Inc. (NASDAQ:ANIK) but similarly valued. We will take a look at Monarch Casino & Resort, Inc. (NASDAQ:MCRI), Thermon Group Holdings, Inc. (NYSE:THR), Urstadt Biddle Properties Inc. (NYSE:UBP), and Gladstone Commercial Corporation (NASDAQ:GOOD). This group of stocks’ market values resemble ANIK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MCRI | 11 | 117028 | 3 |
| THR | 12 | 39394 | 2 |
| UBP | 2 | 12793 | 0 |
| GOOD | 5 | 72623 | 0 |
| Average | 7.5 | 60460 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $94 million in ANIK’s case. Thermon Group Holdings, Inc. (NYSE:THR) is the most popular stock in this table. On the other hand Urstadt Biddle Properties Inc. (NYSE:UBP) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Anika Therapeutics, Inc. (NASDAQ:ANIK) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately ANIK wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ANIK were disappointed as the stock returned 5.3% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
