Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. This year hedge funds’ top 20 stock picks easily bested the broader market, at 37.4% compared to 27.5%, despite there being a few duds in there like Berkshire Hathaway (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Hedge fund interest in Marker Therapeutics, Inc. (NASDAQ:MRKR) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Iteris Inc (NYSE:ITI), ASA Gold and Precious Metals Ltd (NYSE:ASA), and BRT Realty Trust (NYSE:BRT) to gather more data points. Our calculations also showed that MRKR 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.
According to most traders, hedge funds are assumed to be worthless, outdated investment tools of the past. While there are more than 8000 funds with their doors open at the moment, We choose to focus on the aristocrats of this club, about 750 funds. Most estimates calculate that this group of people command the majority of all hedge funds’ total asset base, and by keeping track of their highest performing stock picks, Insider Monkey has determined several investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Felix Baker of Baker Bros.
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. Let’s take a peek at the recent hedge fund action surrounding Marker Therapeutics, Inc. (NASDAQ:MRKR).
Hedge fund activity in Marker Therapeutics, Inc. (NASDAQ:MRKR)
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in MRKR a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
More specifically, Perceptive Advisors was the largest shareholder of Marker Therapeutics, Inc. (NASDAQ:MRKR), with a stake worth $10.2 million reported as of the end of September. Trailing Perceptive Advisors was Baker Bros. Advisors, which amassed a stake valued at $7.7 million. Marshall Wace, Citadel Investment Group, and Arrowstreet Capital 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 Perceptive Advisors allocated the biggest weight to Marker Therapeutics, Inc. (NASDAQ:MRKR), around 0.28% of its 13F portfolio. Baker Bros. Advisors is also relatively very bullish on the stock, dishing out 0.05 percent of its 13F equity portfolio to MRKR.
Since Marker Therapeutics, Inc. (NASDAQ:MRKR) has faced bearish sentiment from hedge fund managers, it’s easy to see that there is a sect of fund managers who were dropping their full holdings in the third quarter. Interestingly, Ari Zweiman’s 683 Capital Partners sold off the largest investment of all the hedgies tracked by Insider Monkey, comprising about $4.4 million in stock, and John Osterweis’s Osterweis Capital Management was right behind this move, as the fund sold off about $0.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Marker Therapeutics, Inc. (NASDAQ:MRKR). We will take a look at Iteris Inc (NYSE:ITI), ASA Gold and Precious Metals Ltd (NYSE:ASA), BRT Realty Trust (NYSE:BRT), and Workhorse Group, Inc. (NASDAQ:WKHS). This group of stocks’ market values resemble MRKR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ITI | 12 | 27224 | -3 |
| ASA | 3 | 14873 | 0 |
| BRT | 5 | 11630 | 1 |
| WKHS | 5 | 7670 | 2 |
| Average | 6.25 | 15349 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $20 million in MRKR’s case. Iteris Inc (NYSE:ITI) is the most popular stock in this table. On the other hand ASA Gold and Precious Metals Ltd (NYSE:ASA) is the least popular one with only 3 bullish hedge fund positions. Marker Therapeutics, Inc. (NASDAQ:MRKR) 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. 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 MRKR wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MRKR were disappointed as the stock returned -34.6% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
