We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Aravive, Inc. (NASDAQ:ARAV).
Aravive, Inc. (NASDAQ:ARAV) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of September. At the end of this article we will also compare ARAV to other stocks including Abraxas Petroleum Corporation (NASDAQ:AXAS), Aduro BioTech Inc (NASDAQ:ADRO), and NeuBase Therapeutics, Inc. (NASDAQ:NBSE) to get a better sense of its popularity.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most shareholders, hedge funds are perceived as worthless, old financial vehicles of years past. While there are more than 8000 funds trading at present, We choose to focus on the elite of this group, around 750 funds. These money managers shepherd most of the hedge fund industry’s total capital, and by watching their top investments, Insider Monkey has unsheathed a few investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
John Overdeck of Two Sigma Advisors
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind we’re going to take a glance at the new hedge fund action encompassing Aravive, Inc. (NASDAQ:ARAV).
How are hedge funds trading Aravive, Inc. (NASDAQ:ARAV)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in ARAV a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Julian Baker and Felix Baker’s Baker Bros. Advisors has the largest position in Aravive, Inc. (NASDAQ:ARAV), worth close to $5 million, amounting to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Srini Akkaraju and Michael Dybbs of Samsara BioCapital, with a $3.3 million position; 2.3% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish consist of Renaissance Technologies, John Overdeck and David Siegel’s Two Sigma Advisors and . In terms of the portfolio weights assigned to each position Samsara BioCapital allocated the biggest weight to Aravive, Inc. (NASDAQ:ARAV), around 2.26% of its 13F portfolio. Baker Bros. Advisors is also relatively very bullish on the stock, designating 0.03 percent of its 13F equity portfolio to ARAV.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s now take a look at hedge fund activity in other stocks similar to Aravive, Inc. (NASDAQ:ARAV). We will take a look at Abraxas Petroleum Corporation (NASDAQ:AXAS), Aduro BioTech Inc (NASDAQ:ADRO), NeuBase Therapeutics, Inc. (NASDAQ:NBSE), and Randolph Bancorp, Inc. (NASDAQ:RNDB). This group of stocks’ market caps match ARAV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AXAS | 8 | 9618 | -1 |
| ADRO | 9 | 6771 | 1 |
| NBSE | 2 | 8962 | 0 |
| RNDB | 2 | 6691 | 0 |
| Average | 5.25 | 8011 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $10 million in ARAV’s case. Aduro BioTech Inc (NASDAQ:ADRO) is the most popular stock in this table. On the other hand NeuBase Therapeutics, Inc. (NASDAQ:NBSE) is the least popular one with only 2 bullish hedge fund positions. Aravive, Inc. (NASDAQ:ARAV) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on ARAV as the stock returned 28.3% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.