Is PainReform Ltd. (NASDAQ:PRFX) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is PRFX a good stock to buy? PainReform Ltd. (NASDAQ:PRFX) shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. PainReform Ltd. (NASDAQ:PRFX) was in 3 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 2. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 2 hedge funds in our database with PRFX holdings at the end of December. Our calculations also showed that PRFX 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.
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 $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. Keeping this in mind let’s take a gander at the new hedge fund action regarding PainReform Ltd. (NASDAQ:PRFX).
Do Hedge Funds Think PRFX Is A Good Stock To Buy Now?
At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in PRFX a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in PainReform Ltd. (NASDAQ:PRFX) was held by Armistice Capital, which reported holding $3.7 million worth of stock at the end of December. It was followed by Sabby Capital with a $1.5 million position. The only other hedge fund that is bullish on the company was Citadel Investment Group.
Now, some big names have been driving this bullishness. Armistice Capital, managed by Steven Boyd, assembled the largest position in PainReform Ltd. (NASDAQ:PRFX). Armistice Capital had $3.7 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.1 million position during the quarter.
Let’s now review hedge fund activity in other stocks similar to PainReform Ltd. (NASDAQ:PRFX). These stocks are JAKKS Pacific, Inc. (NASDAQ:JAKK), Astrotech Corporation (NASDAQ:ASTC), HV Bancorp, Inc. (NASDAQ:HVBC), Gulf Resources, Inc. (NASDAQ:GURE), IMPAC Mortgage Holdings, Inc (NYSE:IMH), Teligent, Inc. (NASDAQ:TLGT), and Helius Medical Technologies, Inc. (NASDAQ:HSDT). This group of stocks’ market caps match PRFX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JAKK | 3 | 2688 | -1 |
| ASTC | 2 | 117 | -1 |
| HVBC | 1 | 503 | -1 |
| GURE | 2 | 1715 | 1 |
| IMH | 2 | 430 | -3 |
| TLGT | 4 | 4431 | 1 |
| HSDT | 2 | 2622 | 0 |
| Average | 2.3 | 1787 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.3 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $5 million in PRFX’s case. Teligent, Inc. (NASDAQ:TLGT) is the most popular stock in this table. On the other hand HV Bancorp, Inc. (NASDAQ:HVBC) is the least popular one with only 1 bullish hedge fund positions. PainReform Ltd. (NASDAQ:PRFX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PRFX is 69.3. 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 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 PRFX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PRFX were disappointed as the stock returned -36.2% 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.
Follow Painreform Ltd. (NASDAQ:PRFX)
Follow Painreform Ltd. (NASDAQ:PRFX)
Disclosure: None. This article was originally published at Insider Monkey.