While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding NLS Pharmaceutics AG (NASDAQ:NLSP).
Is NLSP a good stock to buy now? Prominent investors were getting more optimistic. The number of bullish hedge fund positions moved up by 3 recently. NLS Pharmaceutics AG (NASDAQ:NLSP) was in 3 hedge funds’ portfolios at the end of March. Our calculations also showed that NLSP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 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. With all of this in mind let’s take a gander at the fresh hedge fund action surrounding NLS Pharmaceutics AG (NASDAQ:NLSP).
Do Hedge Funds Think NLSP Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3 from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NLSP over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Armistice Capital, managed by Steven Boyd, holds the number one position in NLS Pharmaceutics AG (NASDAQ:NLSP). Armistice Capital has a $0.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Armistice Capital’s heels is Hudson Bay Capital Management, managed by Sander Gerber, which holds a $0.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. In terms of the portfolio weights assigned to each position Armistice Capital allocated the biggest weight to NLS Pharmaceutics AG (NASDAQ:NLSP), around 0.01% of its 13F portfolio. Hudson Bay Capital Management is also relatively very bullish on the stock, setting aside 0.0023 percent of its 13F equity portfolio to NLSP.
With a general bullishness amongst the heavyweights, some big names have jumped into NLS Pharmaceutics AG (NASDAQ:NLSP) headfirst. Armistice Capital, managed by Steven Boyd, initiated the biggest position in NLS Pharmaceutics AG (NASDAQ:NLSP). Armistice Capital had $0.5 million invested in the company at the end of the quarter. Sander Gerber’s Hudson Bay Capital Management also initiated a $0.2 million position during the quarter. The only other fund with a new position in the stock is Israel Englander’s Millennium Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as NLS Pharmaceutics AG (NASDAQ:NLSP) but similarly valued. We will take a look at Tremont Mortgage Trust (NASDAQ:TRMT), Broadway Financial Corporation (NASDAQ:BYFC), Comstock Holding Companies, Inc. (NASDAQ:CHCI), China Jo Jo Drugstores Inc (NASDAQ:CJJD), Air Industries Group (NYSE:AIRI), Elmira Savings Bank (NASDAQ:ESBK), and Pintec Technology Holdings Limited (NASDAQ:PT). This group of stocks’ market caps match NLSP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TRMT | 3 | 1284 | 1 |
| BYFC | 3 | 1142 | -1 |
| CHCI | 2 | 2312 | -1 |
| CJJD | 6 | 7692 | 1 |
| AIRI | 1 | 69 | -1 |
| ESBK | 1 | 166 | 0 |
| PT | 2 | 141 | -1 |
| Average | 2.6 | 1829 | -0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.6 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $1 million in NLSP’s case. China Jo Jo Drugstores Inc (NASDAQ:CJJD) is the most popular stock in this table. On the other hand Air Industries Group (NYSE:AIRI) is the least popular one with only 1 bullish hedge fund positions. NLS Pharmaceutics AG (NASDAQ:NLSP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NLSP is 40. 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 positive signal but 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 beat the market again by 3.3 percentage points. Unfortunately NLSP wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NLSP were disappointed as the stock returned -15.6% 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.