The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Unity Biotechnology, Inc. (NASDAQ:UBX) based on those filings.
Unity Biotechnology, Inc. (NASDAQ:UBX) was in 5 hedge funds’ portfolios at the end of September. The all time high for this statistics is 7. UBX investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months. There were 7 hedge funds in our database with UBX holdings at the end of June. Our calculations also showed that UBX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Peter Algert of Algert Global
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind we’re going to review the new hedge fund action surrounding Unity Biotechnology, Inc. (NASDAQ:UBX).
What have hedge funds been doing with Unity Biotechnology, Inc. (NASDAQ:UBX)?
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in UBX 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.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, EcoR1 Capital, managed by Oleg Nodelman, holds the most valuable position in Unity Biotechnology, Inc. (NASDAQ:UBX). EcoR1 Capital has a $1 million position in the stock, comprising 0.1% of its 13F portfolio. On EcoR1 Capital’s heels is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $0.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other peers that are bullish include Ken Griffin’s Citadel Investment Group, Peter Algert’s Algert Global and Peter Muller’s PDT Partners. In terms of the portfolio weights assigned to each position EcoR1 Capital allocated the biggest weight to Unity Biotechnology, Inc. (NASDAQ:UBX), around 0.07% of its 13F portfolio. Algert Global is also relatively very bullish on the stock, earmarking 0.06 percent of its 13F equity portfolio to UBX.
Judging by the fact that Unity Biotechnology, Inc. (NASDAQ:UBX) has witnessed a decline in interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few funds that decided to sell off their entire stakes in the third quarter. Intriguingly, Israel Englander’s Millennium Management cut the biggest position of all the hedgies monitored by Insider Monkey, worth close to $4.6 million in stock. Renaissance Technologies, also sold off its stock, about $2.4 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to Unity Biotechnology, Inc. (NASDAQ:UBX). We will take a look at Moneygram International Inc (NASDAQ:MGI), Tilly’s Inc (NYSE:TLYS), OptiNose, Inc. (NASDAQ:OPTN), SWK Holdings Corporation (NASDAQ:SWKH), Contango Oil & Gas Company (NYSE:MCF), Nabors Industries Ltd. (NYSE:NBR), and Mustang Bio, Inc. (NASDAQ:MBIO). This group of stocks’ market valuations resemble UBX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MGI | 9 | 16462 | 1 |
| TLYS | 14 | 26711 | -1 |
| OPTN | 11 | 22447 | 2 |
| SWKH | 3 | 143747 | -1 |
| MCF | 3 | 2678 | 0 |
| NBR | 12 | 13624 | -3 |
| MBIO | 13 | 17492 | 0 |
| Average | 9.3 | 34737 | -0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.3 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $2 million in UBX’s case. Tilly’s Inc (NYSE:TLYS) is the most popular stock in this table. On the other hand SWK Holdings Corporation (NASDAQ:SWKH) is the least popular one with only 3 bullish hedge fund positions. Unity Biotechnology, Inc. (NASDAQ:UBX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for UBX is 33.5. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on UBX as the stock returned 83.8% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
