Hedge funds are known to underperform the bull markets but that’s not because they are bad at investing. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. Hedge funds underperform because they are hedged. The Standard and Poor’s 500 Total Return Index ETFs returned 27.5% through the end of November. Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 37.4% during the same period. An average long/short hedge fund returned only a fraction of this due to the hedges they implement and the large fees they charge. Our research covering the last 18 years indicates that investors can outperform the market by imitating hedge funds’ consensus stock picks rather than directly investing in hedge funds. 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 CTI BioPharma Corp. (NASDAQ:CTIC).
CTI BioPharma Corp. (NASDAQ:CTIC) investors should pay attention to an increase in hedge fund interest lately. CTIC was in 8 hedge funds’ portfolios at the end of September. There were 7 hedge funds in our database with CTIC holdings at the end of the previous quarter. Our calculations also showed that CTIC 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 today’s marketplace there are dozens of methods investors put to use to appraise publicly traded companies. Two of the less utilized methods are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can outpace the S&P 500 by a very impressive margin (see the details here).
Samuel Isaly of OrbiMed 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 check out the latest hedge fund action surrounding CTI BioPharma Corp. (NASDAQ:CTIC).
What does smart money think about CTI BioPharma Corp. (NASDAQ:CTIC)?
At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in CTIC over the last 17 quarters. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Among these funds, Biotechnology Value Fund held the most valuable stake in CTI BioPharma Corp. (NASDAQ:CTIC), which was worth $5.8 million at the end of the third quarter. On the second spot was OrbiMed Advisors which amassed $4.2 million worth of shares. Renaissance Technologies, Millennium Management, and Paloma Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Biotechnology Value Fund allocated the biggest weight to CTI BioPharma Corp. (NASDAQ:CTIC), around 0.61% of its 13F portfolio. OrbiMed Advisors is also relatively very bullish on the stock, setting aside 0.08 percent of its 13F equity portfolio to CTIC.
There weren’t any hedge funds initiating brand new positions in the stock during the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as CTI BioPharma Corp. (NASDAQ:CTIC) but similarly valued. These stocks are Bellicum Pharmaceuticals Inc (NASDAQ:BLCM), Beyond Air, Inc. (NASDAQ:XAIR), Vascular Biogenics Ltd. (NASDAQ:VBLT), and Forward Pharma A/S (NASDAQ:FWP). This group of stocks’ market values are closest to CTIC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BLCM | 12 | 8619 | 1 |
| XAIR | 3 | 2211 | 1 |
| VBLT | 3 | 217 | 0 |
| FWP | 3 | 9895 | 0 |
| Average | 5.25 | 5236 | 0.5 |
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 $5 million. That figure was $12 million in CTIC’s case. Bellicum Pharmaceuticals Inc (NASDAQ:BLCM) is the most popular stock in this table. On the other hand Beyond Air, Inc. (NASDAQ:XAIR) is the least popular one with only 3 bullish hedge fund positions. CTI BioPharma Corp. (NASDAQ:CTIC) is not the most popular stock in this group but hedge fund interest is still above 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. Hedge funds were also right about betting on CTIC as the stock returned 13.1% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
