Is Nabriva Therapeutics plc (NASDAQ:NBRV) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Nabriva Therapeutics plc (NASDAQ:NBRV) has experienced an increase in support from the world’s most elite money managers recently. Our calculations also showed that NBRV 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.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
Samuel Isaly of OrbiMed Advisors
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. Let’s take a look at the recent hedge fund action regarding Nabriva Therapeutics plc (NASDAQ:NBRV).
What does smart money think about Nabriva Therapeutics plc (NASDAQ:NBRV)?
Heading into the fourth quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NBRV over the last 17 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, OrbiMed Advisors was the largest shareholder of Nabriva Therapeutics plc (NASDAQ:NBRV), with a stake worth $9.3 million reported as of the end of September. Trailing OrbiMed Advisors was Frazier Healthcare Partners, which amassed a stake valued at $8.5 million. Vivo Capital, Rock Springs Capital Management, and Renaissance Technologies 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 Frazier Healthcare Partners allocated the biggest weight to Nabriva Therapeutics plc (NASDAQ:NBRV), around 2.66% of its 13F portfolio. Vivo Capital is also relatively very bullish on the stock, setting aside 0.63 percent of its 13F equity portfolio to NBRV.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the largest position in Nabriva Therapeutics plc (NASDAQ:NBRV). Arrowstreet Capital had $0.1 million invested in the company at the end of the quarter. David E. Shaw’s D E Shaw also initiated a $0 million position during the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Nabriva Therapeutics plc (NASDAQ:NBRV). We will take a look at Lineage Cell Therapeutics, Inc. (NYSE:LCTX), Scully Royalty Ltd. (NYSE:SRL), Colony Bankcorp Inc (NASDAQ:CBAN), and StoneCastle Financial Corp (NASDAQ:BANX). This group of stocks’ market caps are similar to NBRV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LCTX | 5 | 33651 | 0 |
| SRL | 2 | 10530 | 0 |
| CBAN | 3 | 9572 | -1 |
| BANX | 1 | 222 | 0 |
| Average | 2.75 | 13494 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.75 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $32 million in NBRV’s case. Lineage Cell Therapeutics, Inc. (NYSE:LCTX) is the most popular stock in this table. On the other hand StoneCastle Financial Corp (NASDAQ:BANX) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Nabriva Therapeutics plc (NASDAQ:NBRV) is more popular among hedge funds. 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 NBRV wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on NBRV were disappointed as the stock returned 1% 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.
