We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Idera Pharmaceuticals Inc (NASDAQ:IDRA).
Hedge fund interest in Idera Pharmaceuticals Inc (NASDAQ:IDRA) shares was flat at the end of last quarter. This is usually a negative indicator. 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 PolarityTE, Inc. (NASDAQ:PTE), Servicesource International Inc (NASDAQ:SREV), and Gulf Island Fabrication, Inc. (NASDAQ:GIFI) to gather more data points. Our calculations also showed that IDRA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are several methods investors employ to evaluate publicly traded companies. A pair of the most under-the-radar methods are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the best fund managers can beat the S&P 500 by a very impressive amount (see the details here).
John Overdeck of Two Sigma Advisors
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to go over the new hedge fund action regarding Idera Pharmaceuticals Inc (NASDAQ:IDRA).
How have hedgies been trading Idera Pharmaceuticals Inc (NASDAQ:IDRA)?
At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2019. On the other hand, there were a total of 9 hedge funds with a bullish position in IDRA a year ago. So, let’s check out 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, Julian Baker and Felix Baker’s Baker Bros. Advisors has the biggest position in Idera Pharmaceuticals Inc (NASDAQ:IDRA), worth close to $13.3 million, amounting to 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Israel Englander of Millennium Management, with a $2.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish consist of Renaissance Technologies, David E. Shaw’s D E Shaw and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Baker Bros. Advisors allocated the biggest weight to Idera Pharmaceuticals Inc (NASDAQ:IDRA), around 0.09% of its 13F portfolio. Palo Alto Investors is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to IDRA.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s check out hedge fund activity in other stocks similar to Idera Pharmaceuticals Inc (NASDAQ:IDRA). These stocks are PolarityTE, Inc. (NASDAQ:PTE), Servicesource International Inc (NASDAQ:SREV), Gulf Island Fabrication, Inc. (NASDAQ:GIFI), and Consumer Portfolio Services, Inc. (NASDAQ:CPSS). This group of stocks’ market valuations resemble IDRA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PTE | 11 | 14461 | 1 |
| SREV | 13 | 23539 | -1 |
| GIFI | 11 | 14660 | 2 |
| CPSS | 1 | 1332 | 0 |
| Average | 9 | 13498 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $18 million in IDRA’s case. Servicesource International Inc (NASDAQ:SREV) is the most popular stock in this table. On the other hand Consumer Portfolio Services, Inc. (NASDAQ:CPSS) is the least popular one with only 1 bullish hedge fund positions. Idera Pharmaceuticals Inc (NASDAQ:IDRA) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately IDRA wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); IDRA investors were disappointed as the stock returned -39.4% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
