Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index returned about 5.2% during the last 12 months ending October 30, 2015. Less than 49% of the stocks in the index outperformed the index. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 30 S&P 500 stocks among hedge funds at the end of September 2014 had an average return of 9.5% during the same period. Sixty three percent of these 30 stocks outperformed the market. Hedge funds had bad stock picks like everyone else. Micron, which lost 50% over this period, was one of hedge funds’ 30 favorite S&P 500 stocks. Anadarko Petroleum was another failed stock pick which lost more than 26%. So, taking cues from hedge funds isn’t a foolproof strategy, but it seems to work on average. In this article, we will take a look at what hedge funds think about Sorrentto Therapeutics Inc (NASDAQ:SRNE).
Sorrentto Therapeutics Inc (NASDAQ:SRNE) has experienced an increase in hedge fund interest recently. It might come as a surprise to the investors tracking the stock performance of the company, as its shares were down 52.38% during the last quarter. In order to find out more about the hedge fund behavior, we will discuss hedgies that held stake in Sorrentto Therapeutics Inc (NASDAQ:SRNE), at the end of September.
The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as Amyris Inc (NASDAQ:AMRS), Telenav Inc (NASDAQ:TNAV), and PDF Solutions, Inc. (NASDAQ:PDFS) to gather more data points.
Follow Sorrento Therapeutics Inc. (NASDAQ:SRNEQ)
Follow Sorrento Therapeutics Inc. (NASDAQ:SRNEQ)
In today’s marketplace, there are several signals stock traders employ to grade their stock investments. A pair of the most under-the-radar signals are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat the S&P 500 by a healthy amount (see the details here).
Now, let’s go over the new action surrounding Sorrentto Therapeutics Inc (NASDAQ:SRNE).
Hedge fund activity in Sorrentto Therapeutics Inc (NASDAQ:SRNE)
At the end of Q3, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 30% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Behzad Aghazadeh’s venBio Select Advisor has the biggest position in Sorrentto Therapeutics Inc (NASDAQ:SRNE), worth close to $18.1 million, comprising 4.7% of its total 13F portfolio. Sitting at the No. 2 spot is Cormorant Asset Management, led by Bihua Chen, holding a $17.6 million position; 2.8% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that hold long positions encompass Leonard A. Potter’s Wildcat Capital Management, Dennis Purcell’s Aisling Capital, and Hal Mintz’s Sabby Capital.
Consequently, key hedge funds have jumped into Sorrentto Therapeutics Inc (NASDAQ:SRNE) headfirst. Sabby Capital created the most outsized call position in Sorrentto Therapeutics Inc (NASDAQ:SRNE). Sabby Capital had $1.9 million invested in the company at the end of the quarter. The other funds with new positions in the stock are Cliff Asness’ AQR Capital Management, D E Shaw, and Matthew Tewksbury’s Stevens Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Sorrentto Therapeutics Inc (NASDAQ:SRNE). These stocks are Amyris Inc (NASDAQ:AMRS), Telenav Inc (NASDAQ:TNAV), PDF Solutions, Inc. (NASDAQ:PDFS), and Immersion Corporation (NASDAQ:IMMR). This group of stocks’ market values are similar to Sorrentto Therapeutics Inc (NASDAQ:SRNE)’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMRS | 4 | 4374 | -1 |
| TNAV | 16 | 66295 | -4 |
| PDFS | 19 | 56317 | 5 |
| IMMR | 21 | 131935 | -1 |
As you can see, these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $59 million in Sorrentto Therapeutics Inc (NASDAQ:SRNE)’s case. Immersion Corporation (NASDAQ:IMMR) is the most popular stock in this table. On the other hand, Amyris Inc (NASDAQ:AMRS) is the least popular one with only 4 bullish hedge fund positions. Sorrentto Therapeutics Inc (NASDAQ:SRNE) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Immersion Corporation (NASDAQ:IMMR) might be a better candidate to consider a long position.
