How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Lantern Pharma Inc. (NASDAQ:LTRN).
Is LTRN a good stock to buy? Lantern Pharma Inc. (NASDAQ:LTRN) has seen an increase in enthusiasm from smart money recently. Lantern Pharma Inc. (NASDAQ:LTRN) was in 3 hedge funds’ portfolios at the end of March. The all time high for this statistic is 1. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 1 hedge funds in our database with LTRN holdings at the end of December. Our calculations also showed that LTRN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
To the average investor there are several indicators shareholders can use to assess publicly traded companies. Two of the most underrated indicators are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can outpace the market by a healthy amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Ken Griffin of Citadel Investment Group
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a glance at the key hedge fund action surrounding Lantern Pharma Inc. (NASDAQ:LTRN).
Do Hedge Funds Think LTRN Is A Good Stock To Buy Now?
At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 200% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in LTRN over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Lantern Pharma Inc. (NASDAQ:LTRN) was held by Corriente Advisors, which reported holding $12.9 million worth of stock at the end of December. It was followed by Millennium Management with a $0.8 million position. The only other hedge fund that is bullish on the company was Citadel Investment Group.
As aggregate interest increased, key money managers were breaking ground themselves. Corriente Advisors, managed by Mark Hart III, initiated the largest position in Lantern Pharma Inc. (NASDAQ:LTRN). Corriente Advisors had $12.9 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.8 million investment in the stock during the quarter. The only other fund with a brand new LTRN position is Ken Griffin’s Citadel Investment Group.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Lantern Pharma Inc. (NASDAQ:LTRN) but similarly valued. These stocks are Consolidated Water Co. Ltd. (NASDAQ:CWCO), Spok Holdings Inc (NASDAQ:SPOK), Kuke Music Holding Limited (NYSE:KUKE), AcelRx Pharmaceuticals Inc (NASDAQ:ACRX), Cedar Realty Trust Inc (NYSE:CDR), Community Financial Corp (NASDAQ:TCFC), and BayCom Corp (NASDAQ:BCML). This group of stocks’ market values resemble LTRN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CWCO | 4 | 9284 | -3 |
| SPOK | 10 | 20419 | -2 |
| KUKE | 2 | 758 | 2 |
| ACRX | 7 | 18656 | 2 |
| CDR | 6 | 11954 | -1 |
| TCFC | 3 | 24179 | 0 |
| BCML | 4 | 20863 | 1 |
| Average | 5.1 | 15159 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.1 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $14 million in LTRN’s case. Spok Holdings Inc (NASDAQ:SPOK) is the most popular stock in this table. On the other hand Kuke Music Holding Limited (NYSE:KUKE) is the least popular one with only 2 bullish hedge fund positions. Lantern Pharma Inc. (NASDAQ:LTRN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LTRN is 43.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately LTRN wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); LTRN investors were disappointed as the stock returned -14.1% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Lantern Pharma Inc. (NASDAQ:LTRN)
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Disclosure: None. This article was originally published at Insider Monkey.
