“Market volatility has picked up again over the past few weeks. Headlines highlight risks regarding interest rates, the Fed, China, house prices, auto sales, trade wars, and more. Uncertainty abounds. But doesn’t it always? I have no view on whether the recent volatility will continue for a while, or whether the market will be back at all-time highs before we know it. I remain focused on preserving and growing our capital, and continue to believe that the best way to do so is via a value-driven, concentrated, patient approach. I shun consensus holdings, rich valuations, and market fads, in favor of solid, yet frequently off-the-beaten-path, businesses run by excellent, aligned management teams, purchased at deep discounts to intrinsic value,” are the words of Maran Capital’s Dan Roller. His stock picks have been beating the S&P 500 Index handily. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) and see how it was affected.
Is AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) a cheap investment now? Hedge funds are betting on the stock. The number of bullish hedge fund bets moved up by 1 lately. Our calculations also showed that aveo isn’t among the 30 most popular stocks among hedge funds.
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’ 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 market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a peek at the fresh hedge fund action encompassing AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO).
What does the smart money think about AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AVEO over the last 13 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Among these funds, Polar Capital held the most valuable stake in AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO), which was worth $13.6 million at the end of the third quarter. On the second spot was 683 Capital Partners which amassed $8.1 million worth of shares. Moreover, Sabby Capital, Millennium Management, and Citadel Investment Group were also bullish on AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, specific money managers have jumped into AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) headfirst. Sectoral Asset Management, managed by Jerome Pfund and Michael Sjostrom, initiated the biggest position in AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO). Sectoral Asset Management had $0.1 million invested in the company at the end of the quarter. Michael Platt and William Reeves’s BlueCrest Capital Mgmt. also initiated a $0.1 million position during the quarter.
Let’s now review hedge fund activity in other stocks similar to AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO). We will take a look at The York Water Company (NASDAQ:YORW), Bridgewater Bancshares, Inc. (NASDAQ:BWB), Savara, Inc. (NASDAQ:SVRA), and Southern National Banc. of Virginia, Inc (NASDAQ:SONA). This group of stocks’ market values are similar to AVEO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| YORW | 6 | 14301 | -2 |
| BWB | 7 | 34845 | 3 |
| SVRA | 13 | 117612 | 4 |
| SONA | 7 | 22405 | 0 |
| Average | 8.25 | 47291 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $28 million in AVEO’s case. Savara, Inc. (NASDAQ:SVRA) is the most popular stock in this table. On the other hand The York Water Company (NASDAQ:YORW) is the least popular one with only 6 bullish hedge fund positions. AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) 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 SVRA might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
