Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Silence Therapeutics plc (NASDAQ:SLN) based on that data.
Is SLN a good stock to buy? Prominent investors were turning bullish. The number of long hedge fund bets went up by 3 in recent months. Silence Therapeutics plc (NASDAQ:SLN) was in 3 hedge funds’ portfolios at the end of March. Our calculations also showed that SLN 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.
Phillip Gross of Adage Capital
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 look at the fresh hedge fund action surrounding Silence Therapeutics plc (NASDAQ:SLN).
Do Hedge Funds Think SLN Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3 from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in SLN a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Biotechnology Value Fund / BVF Inc held the most valuable stake in Silence Therapeutics plc (NASDAQ:SLN), which was worth $15.8 million at the end of the fourth quarter. On the second spot was Adage Capital Management which amassed $10.2 million worth of shares. Consonance Capital Management was 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 Biotechnology Value Fund / BVF Inc allocated the biggest weight to Silence Therapeutics plc (NASDAQ:SLN), around 0.59% of its 13F portfolio. Consonance Capital Management is also relatively very bullish on the stock, setting aside 0.54 percent of its 13F equity portfolio to SLN.
As one would reasonably expect, key money managers were breaking ground themselves. Biotechnology Value Fund / BVF Inc, managed by Mark Lampert, created the most outsized position in Silence Therapeutics plc (NASDAQ:SLN). Biotechnology Value Fund / BVF Inc had $15.8 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also made a $10.2 million investment in the stock during the quarter. The only other fund with a new position in the stock is Mitchell Blutt’s Consonance Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Silence Therapeutics plc (NASDAQ:SLN) but similarly valued. We will take a look at Newtek Business Services Corp (NASDAQ:NEWT), OneWater Marine Inc. (NASDAQ:ONEW), Insteel Industries Inc (NYSE:IIIN), KNOT Offshore Partners LP (NYSE:KNOP), Poseida Therapeutics, Inc. (NASDAQ:PSTX), Gatos Silver, Inc. (NYSE:GATO), and Solid Biosciences Inc. (NASDAQ:SLDB). This group of stocks’ market caps resemble SLN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NEWT | 5 | 5227 | -1 |
| ONEW | 14 | 79135 | 2 |
| IIIN | 12 | 26376 | 1 |
| KNOP | 4 | 28610 | 0 |
| PSTX | 11 | 95566 | 2 |
| GATO | 4 | 20055 | 0 |
| SLDB | 24 | 257972 | 9 |
| Average | 10.6 | 73277 | 1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.6 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $31 million in SLN’s case. Solid Biosciences Inc. (NASDAQ:SLDB) is the most popular stock in this table. On the other hand KNOT Offshore Partners LP (NYSE:KNOP) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Silence Therapeutics plc (NASDAQ:SLN) is even less popular than KNOP. Our overall hedge fund sentiment score for SLN is 8. 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 clearly dropped the ball on SLN as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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. A small number of hedge funds were also right about betting on SLN as the stock returned 23.1% since Q1 (through June 11th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.