Where Do Hedge Funds Stand On Apellis Pharmaceuticals, Inc. (APLS)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 866 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article we look at what those investors think of Apellis Pharmaceuticals, Inc. (NASDAQ:APLS).

Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) has experienced a decrease in hedge fund sentiment lately. Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) was in 34 hedge funds’ portfolios at the end of March. The all time high for this statistic is 35. There were 35 hedge funds in our database with APLS positions at the end of the fourth quarter. Our calculations also showed that APLS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Felix Baker of Baker Bros.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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 check out the fresh hedge fund action encompassing Apellis Pharmaceuticals, Inc. (NASDAQ:APLS).

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

At first quarter’s end, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the previous quarter. The graph below displays the number of hedge funds with bullish position in APLS over the last 23 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Among these funds, Hillhouse Capital Management held the most valuable stake in Apellis Pharmaceuticals, Inc. (NASDAQ:APLS), which was worth $195.6 million at the end of the fourth quarter. On the second spot was Farallon Capital which amassed $93.3 million worth of shares. Cormorant Asset Management, Baker Bros. Advisors, and Avoro Capital Advisors (venBio Select Advisor) 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 Octagon Capital Advisors allocated the biggest weight to Apellis Pharmaceuticals, Inc. (NASDAQ:APLS), around 8.86% of its 13F portfolio. Burrage Capital Management is also relatively very bullish on the stock, earmarking 2.81 percent of its 13F equity portfolio to APLS.

Since Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) has experienced a decline in interest from hedge fund managers, logic holds that there were a few hedge funds who were dropping their entire stakes heading into Q2. Interestingly, Arsani William’s Logos Capital sold off the largest investment of the 750 funds tracked by Insider Monkey, worth about $17.2 million in stock. Ken Griffin’s fund, Citadel Investment Group, also dumped its stock, about $7.6 million worth. These moves are interesting, as aggregate hedge fund interest fell by 1 funds heading into Q2.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) but similarly valued. We will take a look at Meritage Homes Corp (NYSE:MTH), iRobot Corporation (NASDAQ:IRBT), Blackbaud, Inc. (NASDAQ:BLKB), InnovAge Holding Corp. (NASDAQ:INNV), Weingarten Realty Investors (NYSE:WRI), PDC Energy Inc (NASDAQ:PDCE), and ABM Industries, Inc. (NYSE:ABM). All of these stocks’ market caps are closest to APLS’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $188 million. That figure was $696 million in APLS’s case. InnovAge Holding Corp. (NASDAQ:INNV) is the most popular stock in this table. On the other hand Weingarten Realty Investors (NYSE:WRI) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) is more popular among hedge funds. Our overall hedge fund sentiment score for APLS is 83.1. 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 returned 19.3% in 2021 through June 25th but still managed to beat the market by 4.8 percentage points. Hedge funds were also right about betting on APLS as the stock returned 46.8% since the end of March (through 6/25) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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