Is Nuvation Bio Inc. (NUVB) A Good Stock To Buy?

With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was Nuvation Bio Inc. (NYSE:NUVB).

Is NUVB a good stock to buy? Nuvation Bio Inc. (NYSE:NUVB) investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months. Nuvation Bio Inc. (NYSE:NUVB) was in 24 hedge funds’ portfolios at the end of June. The all time high for this statistic is 30. Our calculations also showed that NUVB isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Oleg Nodelman of EcoR1 Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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 we’re going to check out the recent hedge fund action encompassing Nuvation Bio Inc. (NYSE:NUVB).

Do Hedge Funds Think NUVB Is A Good Stock To Buy Now?

At the end of June, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards NUVB over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, EcoR1 Capital was the largest shareholder of Nuvation Bio Inc. (NYSE:NUVB), with a stake worth $127.7 million reported as of the end of June. Trailing EcoR1 Capital was Baupost Group, which amassed a stake valued at $77.1 million. Citadel Investment Group, Redmile Group, and Abrams Capital Management 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 EcoR1 Capital allocated the biggest weight to Nuvation Bio Inc. (NYSE:NUVB), around 4.77% of its 13F portfolio. Abrams Capital Management is also relatively very bullish on the stock, setting aside 0.79 percent of its 13F equity portfolio to NUVB.

Because Nuvation Bio Inc. (NYSE:NUVB) has experienced falling interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of hedgies that elected to cut their full holdings heading into Q3. Intriguingly, Israel Englander’s Millennium Management dropped the largest position of all the hedgies followed by Insider Monkey, valued at close to $14.4 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also sold off its stock, about $10.5 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 6 funds heading into Q3.

Let’s now take a look at hedge fund activity in other stocks similar to Nuvation Bio Inc. (NYSE:NUVB). These stocks are MFA Financial, Inc. (NYSE:MFA), Velodyne Lidar, Inc. (NASDAQ:VLDR), PROS Holdings, Inc. (NYSE:PRO), Ouster, Inc. (NYSE:OUST), Deluxe Corporation (NYSE:DLX), Compass Minerals International, Inc. (NYSE:CMP), and Oasis Petroleum Inc. (NASDAQ:OAS). This group of stocks’ market values are similar to NUVB’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $151 million. That figure was $459 million in NUVB’s case. Oasis Petroleum Inc. (NASDAQ:OAS) is the most popular stock in this table. On the other hand Deluxe Corporation (NYSE:DLX) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Nuvation Bio Inc. (NYSE:NUVB) is more popular among hedge funds. Our overall hedge fund sentiment score for NUVB is 73. 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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Unfortunately NUVB wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NUVB were disappointed as the stock returned 0.4% since the end of the second quarter (through 10/22) 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 since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.