The government requires hedge funds and wealthy investors with over a certain portfolio size to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30. We at Insider Monkey have made an extensive database of more than 700 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Savara, Inc. (NASDAQ:SVRA) based on those filings.
Is Savara, Inc. (NASDAQ:SVRA) a worthy investment today? Money managers are becoming hopeful. The number of bullish hedge fund positions moved up by 4 lately. Our calculations also showed that SVRA isn’t among the 30 most popular stocks among hedge funds.
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 market by 18 percentage points since May 2014 through December 3, 2018 (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.
We’re going to review the new hedge fund action encompassing Savara, Inc. (NASDAQ:SVRA).
What does the smart money think about Savara, Inc. (NASDAQ:SVRA)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 44% from the second quarter of 2018. On the other hand, there were a total of 9 hedge funds with a bullish position in SVRA at the beginning of this year. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
The largest stake in Savara, Inc. (NASDAQ:SVRA) was held by Consonance Capital Management, which reported holding $34.5 million worth of stock at the end of September. It was followed by Farallon Capital with a $27 million position. Other investors bullish on the company included Great Point Partners, Sectoral Asset Management, and Point72 Asset Management.
As one would reasonably expect, key money managers have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, initiated the most valuable position in Savara, Inc. (NASDAQ:SVRA). Point72 Asset Management had $8 million invested in the company at the end of the quarter. James E. Flynn’s Deerfield Management also initiated a $2.8 million position during the quarter. The following funds were also among the new SVRA investors: Nathaniel August’s Mangrove Partners, Louis Bacon’s Moore Global Investments, and Ori Hershkovitz’s Nexthera Capital.
Let’s also examine hedge fund activity in other stocks similar to Savara, Inc. (NASDAQ:SVRA). These stocks are Southern National Bancorp of Virginia, Inc. (NASDAQ:SONA), New Frontier Corp (NYSE:NFC), USA Technologies, Inc. (NASDAQ:USAT), and Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX). This group of stocks’ market caps match SVRA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SONA | 7 | 22405 | 0 |
| NFC | 15 | 80784 | 0 |
| USAT | 15 | 32065 | 2 |
| CPRX | 15 | 92575 | 1 |
| Average | 13 | 56957 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $118 million in SVRA’s case. New Frontier Corp (NYSE:NFC) is the most popular stock in this table. On the other hand Southern National Bancorp of Virginia, Inc. (NASDAQ:SONA) is the least popular one with only 7 bullish hedge fund positions. Savara, Inc. (NASDAQ:SVRA) 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 NFC might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.