A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Eton Pharmaceuticals, Inc. (NASDAQ:ETON).
Eton Pharmaceuticals, Inc. (NASDAQ:ETON) has seen an increase in support from the world’s most elite money managers lately. Eton Pharmaceuticals, Inc. (NASDAQ:ETON) was in 6 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 5. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ETON isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 S&P 500 ETFs by 115 percentage points since March 2017 (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.
Michael Castor of Sio Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. 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. Keeping this in mind we’re going to go over the fresh hedge fund action regarding Eton Pharmaceuticals, Inc. (NASDAQ:ETON).
Do Hedge Funds Think ETON Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in ETON a year ago. So, let’s examine 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, Opaleye Management, managed by James A. Silverman, holds the biggest position in Eton Pharmaceuticals, Inc. (NASDAQ:ETON). Opaleye Management has a $29.6 million position in the stock, comprising 4.3% of its 13F portfolio. Sitting at the No. 2 spot is Michael Castor of Sio Capital, with a $1.2 million position; 0.2% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism contain Nick Thakore’s Diametric Capital, John Overdeck and David Siegel’s Two Sigma Advisors and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital). In terms of the portfolio weights assigned to each position Opaleye Management allocated the biggest weight to Eton Pharmaceuticals, Inc. (NASDAQ:ETON), around 4.34% of its 13F portfolio. Diametric Capital is also relatively very bullish on the stock, setting aside 0.28 percent of its 13F equity portfolio to ETON.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Sio Capital, managed by Michael Castor, initiated the most valuable position in Eton Pharmaceuticals, Inc. (NASDAQ:ETON). Sio Capital had $1.2 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $0.1 million position during the quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Eton Pharmaceuticals, Inc. (NASDAQ:ETON) but similarly valued. These stocks are Polar Power, Inc. (NASDAQ:POLA), Esquire Financial Holdings, Inc. (NASDAQ:ESQ), Tsakos Energy Navigation Ltd. (NYSE:TNP), SPI Energy Co., Ltd. (NASDAQ:SPI), Overseas Shipholding Group, Inc. (NYSE:OSG), Movano Inc. (NASDAQ:MOVE), and Medallion Financial Corp. (NASDAQ:MFIN). This group of stocks’ market valuations match ETON’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| POLA | 2 | 3105 | -1 |
| ESQ | 2 | 17992 | -1 |
| TNP | 5 | 15402 | -1 |
| SPI | 5 | 2057 | 1 |
| OSG | 10 | 49316 | -2 |
| MOVE | 1 | 244 | 1 |
| MFIN | 4 | 4344 | -1 |
| Average | 4.1 | 13209 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.1 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $32 million in ETON’s case. Overseas Shipholding Group, Inc. (NYSE:OSG) is the most popular stock in this table. On the other hand Movano Inc. (NASDAQ:MOVE) is the least popular one with only 1 bullish hedge fund positions. Eton Pharmaceuticals, Inc. (NASDAQ:ETON) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ETON is 63.8. 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 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately ETON wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ETON were disappointed as the stock returned -15% since the end of March (through 6/25) 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.
Follow Eton Pharmaceuticals Inc. (NASDAQ:ETON)
Follow Eton Pharmaceuticals Inc. (NASDAQ:ETON)
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Disclosure: None. This article was originally published at Insider Monkey.
