Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The Insider Monkey team has completed processing the quarterly 13F filings for the December 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 Aimmune Therapeutics Inc (NASDAQ:AIMT).
Is Aimmune Therapeutics Inc (NASDAQ:AIMT) ready to rally soon? Money managers are taking a pessimistic view. The number of long hedge fund positions were cut by 7 lately. Our calculations also showed that AIMT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In the eyes of most stock holders, hedge funds are perceived as unimportant, old financial vehicles of the past. While there are over 8000 funds in operation at the moment, Our researchers look at the top tier of this club, about 850 funds. These money managers control the majority of the hedge fund industry’s total capital, and by watching their first-class picks, Insider Monkey has revealed a number of investment strategies that have historically surpassed the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
William Leland Edwards of Palo Alto Investors
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a look at the recent hedge fund action encompassing Aimmune Therapeutics Inc (NASDAQ:AIMT).
How have hedgies been trading Aimmune Therapeutics Inc (NASDAQ:AIMT)?
Heading into the first quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -35% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AIMT over the last 18 quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Palo Alto Investors was the largest shareholder of Aimmune Therapeutics Inc (NASDAQ:AIMT), with a stake worth $113.1 million reported as of the end of September. Trailing Palo Alto Investors was Baker Bros. Advisors, which amassed a stake valued at $22.6 million. Hudson Bay Capital Management, Balyasny Asset Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Palo Alto Investors allocated the biggest weight to Aimmune Therapeutics Inc (NASDAQ:AIMT), around 6.23% of its 13F portfolio. Dorset Management is also relatively very bullish on the stock, dishing out 0.76 percent of its 13F equity portfolio to AIMT.
Due to the fact that Aimmune Therapeutics Inc (NASDAQ:AIMT) has faced bearish sentiment from hedge fund managers, we can see that there is a sect of funds that decided to sell off their entire stakes last quarter. Intriguingly, Dennis Purcell’s Aisling Capital cut the biggest investment of all the hedgies monitored by Insider Monkey, worth close to $26 million in stock, and Jim Tananbaum’s Foresite Capital was right behind this move, as the fund dumped about $12.8 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 7 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Aimmune Therapeutics Inc (NASDAQ:AIMT). We will take a look at SailPoint Technologies Holdings, Inc. (NYSE:SAIL), Deluxe Corporation (NYSE:DLX), AssetMark Financial Holdings, Inc. (NYSE:AMK), and Matador Resources Co (NYSE:MTDR). This group of stocks’ market caps are similar to AIMT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SAIL | 25 | 250134 | -1 |
| DLX | 29 | 162395 | 5 |
| AMK | 6 | 50409 | -4 |
| MTDR | 23 | 163971 | 7 |
| Average | 20.75 | 156727 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $157 million. That figure was $165 million in AIMT’s case. Deluxe Corporation (NYSE:DLX) is the most popular stock in this table. On the other hand AssetMark Financial Holdings, Inc. (NYSE:AMK) is the least popular one with only 6 bullish hedge fund positions. Aimmune Therapeutics Inc (NASDAQ:AIMT) 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. 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 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but beat the market by 4.2 percentage points. Unfortunately AIMT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); AIMT investors were disappointed as the stock returned -57.9% during the same time period 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 most of these stocks already outperformed the market in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
