Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Spruce Biosciences, Inc. (NASDAQ:SPRB) to find out whether there were any major changes in hedge funds’ views.
Is Spruce Biosciences, Inc. (NASDAQ:SPRB) a buy right now? The smart money was turning bullish. The number of long hedge fund bets went up by 2 lately. Spruce Biosciences, Inc. (NASDAQ:SPRB) was in 10 hedge funds’ portfolios at the end of June. The all time high for this statistic is 11. Our calculations also showed that SPRB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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James E. Flynn of Deerfield Management
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Do Hedge Funds Think SPRB Is A Good Stock To Buy Now?
At Q2’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SPRB over the last 24 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Spruce Biosciences, Inc. (NASDAQ:SPRB) was held by Deerfield Management, which reported holding $22.9 million worth of stock at the end of June. It was followed by Citadel Investment Group with a $19.1 million position. Other investors bullish on the company included Rock Springs Capital Management, Sio Capital, and Adage Capital Management. In terms of the portfolio weights assigned to each position Sio Capital allocated the biggest weight to Spruce Biosciences, Inc. (NASDAQ:SPRB), around 1.8% of its 13F portfolio. Deerfield Management is also relatively very bullish on the stock, earmarking 0.41 percent of its 13F equity portfolio to SPRB.
Now, key money managers have jumped into Spruce Biosciences, Inc. (NASDAQ:SPRB) headfirst. Deerfield Management, managed by James E. Flynn, assembled the largest position in Spruce Biosciences, Inc. (NASDAQ:SPRB). Deerfield Management had $22.9 million invested in the company at the end of the quarter. Frank Fu’s CaaS Capital also made a $1 million investment in the stock during the quarter. The only other fund with a brand new SPRB position is Anand Parekh’s Alyeska Investment Group.
Let’s now take a look at hedge fund activity in other stocks similar to Spruce Biosciences, Inc. (NASDAQ:SPRB). These stocks are Zedge, Inc. (NYSE:ZDGE), Kezar Life Sciences, Inc. (NASDAQ:KZR), CorMedix Inc. (NASDAQ:CRMD), Motorsport Games Inc. (NASDAQ:MSGM), Kamada Ltd (NASDAQ:KMDA), Innate Pharma S.A. (NASDAQ:IPHA), and Orrstown Financial Services, Inc. (NASDAQ:ORRF). This group of stocks’ market caps resemble SPRB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ZDGE | 8 | 16466 | 2 |
| KZR | 12 | 46358 | -1 |
| CRMD | 5 | 12475 | 2 |
| MSGM | 4 | 7368 | -2 |
| KMDA | 6 | 12289 | 2 |
| IPHA | 1 | 155 | -1 |
| ORRF | 3 | 7360 | -1 |
| Average | 5.6 | 14639 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.6 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $73 million in SPRB’s case. Kezar Life Sciences, Inc. (NASDAQ:KZR) is the most popular stock in this table. On the other hand Innate Pharma S.A. (NASDAQ:IPHA) is the least popular one with only 1 bullish hedge fund positions. Spruce Biosciences, Inc. (NASDAQ:SPRB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SPRB is 75.2. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 25.7% in 2021 through September 27th and beat the market again by 6.2 percentage points. Unfortunately SPRB wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SPRB were disappointed as the stock returned -45% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
