Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last four quarters ending in October and sixty three percent of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at OvaScience Inc (NASDAQ:OVAS) from the perspective of those elite funds.
As OvaScience Inc (NASDAQ:OVAS)’s stock plunged by 69% in the third quarter, it has experienced a decrease in support from the world’s most elite money managers. However, 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 Bel Fuse, Inc. (NASDAQ:BELFB), Independence Realty Trust Inc (NYSEMKT:IRT), and Safe Bulkers, Inc. (NYSE:SB) to gather more data points.
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In the eyes of most market participants, hedge funds are seen as worthless, outdated investment tools of the past. While there are over 8000 funds trading at the moment, Our researchers hone in on the bigwigs of this group, about 700 funds. These hedge fund managers watch over most of all hedge funds’ total capital, and by watching their matchless equity investments, Insider Monkey has found several investment strategies that have historically exceeded the market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points a year for a decade in their back tests.
With all of this in mind, we’re going to take a glance at the new action surrounding OvaScience Inc (NASDAQ:OVAS).
How have hedgies been trading OvaScience Inc (NASDAQ:OVAS)?
Heading into Q4, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 7% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the number one position in OvaScience Inc (NASDAQ:OVAS). Adage Capital Management has an $18.9 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Orbis Investment Management, managed by William B. Gray, which holds a $17.7 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish consist of Hal Mintz’s Sabby Capital and Bihua Chen’s Cormorant Asset Management.
Seeing as OvaScience Inc (NASDAQ:OVAS) has witnessed falling interest from the smart money, we can see that there exists a select few hedge funds that slashed their full holdings last quarter. It’s worth mentioning that Mark Kingdon’s Kingdon Capital said goodbye to the largest stake of the “upper crust” of funds watched by Insider Monkey, valued at about $19.6 million in stock. Clifford Fox’s fund, Columbus Circle Investors, also dumped its stock, about $8.1 million worth.
Let’s now take a look at hedge fund activity in other stocks similar to OvaScience Inc (NASDAQ:OVAS). We will take a look at Bel Fuse, Inc. (NASDAQ:BELFB), Independence Realty Trust Inc (NYSEMKT:IRT), Safe Bulkers, Inc. (NYSE:SB), and Big 5 Sporting Goods Corporation (NASDAQ:BGFV). This group of stocks’ market valuations resemble OVAS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BELFB | 11 | 13713 | 4 |
| IRT | 9 | 81140 | 0 |
| SB | 6 | 13244 | 0 |
| BGFV | 15 | 44741 | -1 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $47 million in OVAS’s case. Big 5 Sporting Goods Corporation (NASDAQ:BGFV) is the most popular stock in this table. On the other hand Safe Bulkers, Inc. (NYSE:SB) is the least popular one with only 6 bullish hedge fund positions. OvaScience Inc (NASDAQ:OVAS) 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. In this regard BGFV might be a better candidate to consider a long position.
