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 Celldex Therapeutics, Inc. (NASDAQ:CLDX).
Is Celldex Therapeutics, Inc. (NASDAQ:CLDX) undervalued? The best stock pickers are in a bullish mood. The number of long hedge fund positions inched up by 1 lately. Our calculations also showed that CLDX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). CLDX was in 4 hedge funds’ portfolios at the end of the third quarter of 2019. There were 3 hedge funds in our database with CLDX positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 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 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
David Harding of Winton Capital Management
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. With all of this in mind we’re going to take a gander at the fresh hedge fund action surrounding Celldex Therapeutics, Inc. (NASDAQ:CLDX).
How have hedgies been trading Celldex Therapeutics, Inc. (NASDAQ:CLDX)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the previous quarter. On the other hand, there were a total of 12 hedge funds with a bullish position in CLDX a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies holds the number one position in Celldex Therapeutics, Inc. (NASDAQ:CLDX). Renaissance Technologies has a $2.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Winton Capital Management, managed by David Harding, which holds a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions comprise John Overdeck and David Siegel’s Two Sigma Advisors, David E. Shaw’s D E Shaw and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Celldex Therapeutics, Inc. (NASDAQ:CLDX), around 0.0019% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, earmarking 0.0009 percent of its 13F equity portfolio to CLDX.
As aggregate interest increased, key money managers have jumped into Celldex Therapeutics, Inc. (NASDAQ:CLDX) headfirst. Winton Capital Management, managed by David Harding, assembled the biggest position in Celldex Therapeutics, Inc. (NASDAQ:CLDX). Winton Capital Management had $0.1 million invested in the company at the end of the quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Celldex Therapeutics, Inc. (NASDAQ:CLDX) but similarly valued. These stocks are General Moly, Inc. (NYSE:GMO), WVS Financial Corp. (NASDAQ:WVFC), Wireless Telecom Group, Inc. (NYSE:WTT), and Ocean Bio-Chem, Inc. (NASDAQ:OBCI). This group of stocks’ market valuations resemble CLDX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GMO | 1 | 80 | 0 |
| WVFC | 1 | 1828 | 0 |
| WTT | 1 | 1460 | 0 |
| OBCI | 1 | 192 | 0 |
| Average | 1 | 890 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 1 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $2 million in CLDX’s case. General Moly, Inc. (NYSE:GMO) is the most popular stock in this table. On the other hand General Moly, Inc. (NYSE:GMO) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Celldex Therapeutics, Inc. (NASDAQ:CLDX) 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. Hedge funds were also right about betting on CLDX as the stock returned 12.7% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
