Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Opthea Limited (NASDAQ:OPT) changed recently.
Is OPT a good stock to buy? Opthea Limited (NASDAQ:OPT) investors should be aware of a decrease in support from the world’s most elite money managers recently. Opthea Limited (NASDAQ:OPT) was in 3 hedge funds’ portfolios at the end of March. The all time high for this statistic is 5. There were 5 hedge funds in our database with OPT positions at the end of the fourth quarter. Our calculations also showed that OPT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Felix Baker of Baker Bros.
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. Now let’s take a look at the fresh hedge fund action regarding Opthea Limited (NASDAQ:OPT).
Do Hedge Funds Think OPT Is A Good Stock To Buy Now?
At first quarter’s end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -40% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in OPT a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Opthea Limited (NASDAQ:OPT) was held by Baker Bros. Advisors, which reported holding $31.7 million worth of stock at the end of December. It was followed by Millennium Management with a $2 million position. The only other hedge fund that is bullish on the company was Laurion Capital Management.
Because Opthea Limited (NASDAQ:OPT) has experienced declining sentiment from hedge fund managers, logic holds that there exists a select few hedge funds that decided to sell off their full holdings last quarter. It’s worth mentioning that Arsani William’s Logos Capital said goodbye to the biggest position of the “upper crust” of funds watched by Insider Monkey, valued at about $1.8 million in stock. Frank Fu’s fund, CaaS Capital, also sold off its stock, about $0.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Opthea Limited (NASDAQ:OPT) but similarly valued. These stocks are Mastech Digital, Inc. (NYSE:MHH), Points International Ltd (NASDAQ:PCOM), Aptinyx Inc. (NASDAQ:APTX), Shore Bancshares, Inc. (NASDAQ:SHBI), Sierra Oncology, Inc. (NASDAQ:SRRA), VolitionRX Limited (NYSE:VNRX), and Pacific Mercantile Bancorp (NASDAQ:PMBC). This group of stocks’ market values are similar to OPT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MHH | 3 | 4262 | -2 |
| PCOM | 6 | 29606 | -1 |
| APTX | 8 | 35957 | -3 |
| SHBI | 8 | 34631 | 3 |
| SRRA | 14 | 116969 | -1 |
| VNRX | 5 | 515 | 4 |
| PMBC | 7 | 32539 | 3 |
| Average | 7.3 | 36354 | 0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.3 hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $34 million in OPT’s case. Sierra Oncology, Inc. (NASDAQ:SRRA) is the most popular stock in this table. On the other hand Mastech Digital, Inc. (NYSE:MHH) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Opthea Limited (NASDAQ:OPT) is even less popular than MHH. Our overall hedge fund sentiment score for OPT is 21. 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. Hedge funds dodged a bullet by taking a bearish stance towards OPT. Our calculations showed that the top 10 most popular hedge fund stocks 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 but managed to beat the market again by 3.3 percentage points. Unfortunately OPT wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); OPT investors were disappointed as the stock returned -7% since the end of the first quarter (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 since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.