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 Purple Biotech Ltd. (NASDAQ:PPBT) changed recently.
Is PPBT stock a buy? Purple Biotech Ltd. (NASDAQ:PPBT) was in 4 hedge funds’ portfolios at the end of March. The all time high for this statistic is 3. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. PPBT investors should be aware of an increase in activity from the world’s largest hedge funds of late. There were 2 hedge funds in our database with PPBT holdings at the end of December. Our calculations also showed that PPBT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Samuel Isaly, Founder of Orbimed Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 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 surrounding Purple Biotech Ltd. (NASDAQ:PPBT).
Do Hedge Funds Think PPBT Is A Good Stock To Buy Now?
At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 100% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PPBT over the last 23 quarters. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies has the largest position in Purple Biotech Ltd. (NASDAQ:PPBT), worth close to $0.9 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which holds a $0.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers with similar optimism consist of OrbiMed Advisors, Hal Mintz’s Sabby Capital and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Sabby Capital allocated the biggest weight to Purple Biotech Ltd. (NASDAQ:PPBT), around 0.02% of its 13F portfolio. OrbiMed Advisors is also relatively very bullish on the stock, earmarking 0.0012 percent of its 13F equity portfolio to PPBT.
Now, key money managers have jumped into Purple Biotech Ltd. (NASDAQ:PPBT) headfirst. Citadel Investment Group, managed by Ken Griffin, established the biggest position in Purple Biotech Ltd. (NASDAQ:PPBT). Citadel Investment Group had $0.3 million invested in the company at the end of the quarter. Hal Mintz’s Sabby Capital also made a $0.1 million investment in the stock during the quarter. The only other fund with a new position in the stock is Ken Griffin’s Citadel Investment Group.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Purple Biotech Ltd. (NASDAQ:PPBT) but similarly valued. These stocks are Myomo Inc. (NYSE:MYO), Sypris Solutions, Inc. (NASDAQ:SYPR), aTyr Pharma Inc. (NASDAQ:LIFE), Achieve Life Sciences, Inc. (NASDAQ:ACHV), Jerash Holdings (US), Inc. (NASDAQ:JRSH), Ark Restaurants Corp. (NASDAQ:ARKR), and Chembio Diagnostics Inc (NASDAQ:CEMI). All of these stocks’ market caps resemble PPBT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MYO | 3 | 4877 | 0 |
| SYPR | 3 | 3437 | 0 |
| LIFE | 6 | 6962 | 2 |
| ACHV | 3 | 3690 | 0 |
| JRSH | 2 | 1527 | 0 |
| ARKR | 1 | 1213 | 0 |
| CEMI | 7 | 3452 | 1 |
| Average | 3.6 | 3594 | 0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.6 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $1 million in PPBT’s case. Chembio Diagnostics Inc (NASDAQ:CEMI) is the most popular stock in this table. On the other hand Ark Restaurants Corp. (NASDAQ:ARKR) is the least popular one with only 1 bullish hedge fund positions. Purple Biotech Ltd. (NASDAQ:PPBT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PPBT is 62. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Hedge funds were also right about betting on PPBT as the stock returned 21.8% since the end of Q1 (through 6/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.