Should I Avoid Neptune Wellness Solutions Inc (NEPT)?

The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Neptune Wellness Solutions Inc (NASDAQ:NEPT).

Neptune Wellness Solutions Inc (NASDAQ:NEPT) investors should be aware of a decrease in activity from the world’s largest hedge funds lately. Neptune Wellness Solutions Inc (NASDAQ:NEPT) was in 4 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 9. Our calculations also showed that NEPT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Ray Dalio of Bridgewater Associates

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s take a look at the new hedge fund action encompassing Neptune Wellness Solutions Inc (NASDAQ:NEPT).

Do Hedge Funds Think NEPT Is A Good Stock To Buy Now?

At first quarter’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NEPT over the last 23 quarters. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Joseph Edelman’s Perceptive Advisors has the most valuable position in Neptune Wellness Solutions Inc (NASDAQ:NEPT), worth close to $16.6 million, accounting for 0.2% of its total 13F portfolio. On Perceptive Advisors’s heels is Citadel Investment Group, led by Ken Griffin, holding a $0.3 million call position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism encompass Ray Dalio’s Bridgewater Associates, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Perceptive Advisors allocated the biggest weight to Neptune Wellness Solutions Inc (NASDAQ:NEPT), around 0.21% of its 13F portfolio. Bridgewater Associates is also relatively very bullish on the stock, dishing out 0.0019 percent of its 13F equity portfolio to NEPT.

Since Neptune Wellness Solutions Inc (NASDAQ:NEPT) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there were a few fund managers that elected to cut their entire stakes by the end of the first quarter. At the top of the heap, Steven Boyd’s Armistice Capital cut the biggest investment of the 750 funds followed by Insider Monkey, worth about $6.5 million in stock, and Renaissance Technologies was right behind this move, as the fund dropped about $0.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks similar to Neptune Wellness Solutions Inc (NASDAQ:NEPT). These stocks are Processa Pharmaceuticals, Inc. (NASDAQ:PCSA), Ocean Power Technologies Inc (NASDAQ:OPTT), InflaRx N.V. (NASDAQ:IFRX), Gain Therapeutics, Inc. (NASDAQ:GANX), ImmunoPrecise Antibodies Ltd. (NASDAQ:IPA), First Northwest Bancorp (NASDAQ:FNWB), and USA Truck, Inc. (NASDAQ:USAK). All of these stocks’ market caps match NEPT’s market cap.

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As you can see these stocks had an average of 4.9 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $17 million in NEPT’s case. InflaRx N.V. (NASDAQ:IFRX) is the most popular stock in this table. On the other hand ImmunoPrecise Antibodies Ltd. (NASDAQ:IPA) is the least popular one with only 1 bullish hedge fund positions. Neptune Wellness Solutions Inc (NASDAQ:NEPT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NEPT is 25.7. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on NEPT as the stock returned 10.7% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.