The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Trevena Inc (NASDAQ:TRVN) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Trevena Inc (NASDAQ:TRVN) has seen an increase in enthusiasm from smart money recently. TRVN was in 6 hedge funds’ portfolios at the end of September. There were 5 hedge funds in our database with TRVN positions at the end of the previous quarter. Our calculations also showed that TRVN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now we’re going to analyze the fresh hedge fund action encompassing Trevena Inc (NASDAQ:TRVN).
What does smart money think about Trevena Inc (NASDAQ:TRVN)?
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TRVN over the last 17 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Renaissance Technologies, holds the largest position in Trevena Inc (NASDAQ:TRVN). Renaissance Technologies has a $2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies’s heels is David Harding of Winton Capital Management, with a $0.7 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism encompass John Zaro’s Bourgeon Capital, John Overdeck and David Siegel’s Two Sigma Advisors and David E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Bourgeon Capital allocated the biggest weight to Trevena Inc (NASDAQ:TRVN), around 0.02% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to TRVN.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Winton Capital Management, managed by David Harding, established the biggest position in Trevena Inc (NASDAQ:TRVN). Winton Capital Management had $0.7 million invested in the company at the end of the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Trevena Inc (NASDAQ:TRVN). These stocks are Verastem Inc (NASDAQ:VSTM), Emclaire Financial Corp (NASDAQ:EMCF), RTW Retailwinds, Inc. (NASDAQ:RTW), and Brainstorm Cell Therapeutics Inc. (NASDAQ:BCLI). This group of stocks’ market caps are closest to TRVN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VSTM | 8 | 8446 | -1 |
| EMCF | 2 | 775 | 0 |
| RTW | 7 | 4105 | 1 |
| BCLI | 2 | 1452 | -1 |
| Average | 4.75 | 3695 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $3 million in TRVN’s case. Verastem Inc (NASDAQ:VSTM) is the most popular stock in this table. On the other hand Emclaire Financial Corp (NASDAQ:EMCF) is the least popular one with only 2 bullish hedge fund positions. Trevena Inc (NASDAQ:TRVN) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately TRVN wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TRVN were disappointed as the stock returned -29.1% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
