Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about BioLineRx Ltd. (NASDAQ:BLRX).
BioLineRx Ltd. (NASDAQ:BLRX) has seen a decrease in activity from the world’s largest hedge funds in recent months. BLRX was in 4 hedge funds’ portfolios at the end of September. There were 5 hedge funds in our database with BLRX positions at the end of the previous quarter. Our calculations also showed that BLRX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Samuel Isaly of OrbiMed 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 let’s go over the recent hedge fund action encompassing BioLineRx Ltd. (NASDAQ:BLRX).
How are hedge funds trading BioLineRx Ltd. (NASDAQ:BLRX)?
Heading into the fourth quarter of 2019, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BLRX over the last 17 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Biotechnology Value Fund, managed by Mark Lampert, holds the largest position in BioLineRx Ltd. (NASDAQ:BLRX). Biotechnology Value Fund has a $4.6 million position in the stock, comprising 0.5% of its 13F portfolio. Sitting at the No. 2 spot is Rima Senvest Management, managed by Richard Mashaal, which holds a $1.3 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish comprise Samuel Isaly’s OrbiMed Advisors, James A. Silverman’s Opaleye Management and . In terms of the portfolio weights assigned to each position Biotechnology Value Fund allocated the biggest weight to BioLineRx Ltd. (NASDAQ:BLRX), around 0.48% of its 13F portfolio. Rima Senvest Management is also relatively very bullish on the stock, setting aside 0.11 percent of its 13F equity portfolio to BLRX.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Sectoral Asset Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified BLRX as a viable investment and initiated a position in the stock.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as BioLineRx Ltd. (NASDAQ:BLRX) but similarly valued. These stocks are 1347 Property Insurance Holdings, Inc. (NASDAQ:PIH), WidePoint Corporation (NYSE:WYY), Aptevo Therapeutics Inc. (NASDAQ:APVO), and Future FinTech Group Inc. (NASDAQ:FTFT). This group of stocks’ market values match BLRX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PIH | 4 | 4662 | 2 |
| WYY | 6 | 4510 | 2 |
| APVO | 7 | 3557 | 0 |
| FTFT | 1 | 21 | 0 |
| Average | 4.5 | 3188 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.5 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $6 million in BLRX’s case. Aptevo Therapeutics Inc. (NASDAQ:APVO) is the most popular stock in this table. On the other hand Future FinTech Group Inc. (NASDAQ:FTFT) is the least popular one with only 1 bullish hedge fund positions. BioLineRx Ltd. (NASDAQ:BLRX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 BLRX wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BLRX investors were disappointed as the stock returned -0.8% 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.
