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Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Adicet Bio Inc. (NASDAQ:ACET).
Is Adicet Bio Inc. (NASDAQ:ACET) a buy here? Prominent investors were buying. The number of bullish hedge fund bets moved up by 7 recently. Adicet Bio Inc. (NASDAQ:ACET) was in 16 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 9. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ACET isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 9 hedge funds in our database with ACET holdings at the end of December.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. With all of this in mind let's check out the key hedge fund action encompassing Adicet Bio Inc. (NASDAQ:ACET).
Do Hedge Funds Think ACET Is A Good Stock To Buy Now?
At the end of March, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 78% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in ACET a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, OrbiMed Advisors, holds the biggest position in Adicet Bio Inc. (NASDAQ:ACET). OrbiMed Advisors has a $94.6 million position in the stock, comprising 0.9% of its 13F portfolio. Sitting at the No. 2 spot is Mitchell Blutt of Consonance Capital Management, with a $15.9 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Other professional money managers that are bullish comprise Steve Cohen's Point72 Asset Management, Phill Gross and Robert Atchinson's Adage Capital Management and Wilmot B. Harkey and Daniel Mack's Nantahala Capital Management. In terms of the portfolio weights assigned to each position Consonance Capital Management allocated the biggest weight to Adicet Bio Inc. (NASDAQ:ACET), around 1.7% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, dishing out 1.2 percent of its 13F equity portfolio to ACET.
As industrywide interest jumped, key hedge funds were leading the bulls' herd. Consonance Capital Management, managed by Mitchell Blutt, established the most valuable position in Adicet Bio Inc. (NASDAQ:ACET). Consonance Capital Management had $15.9 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also made a $13.7 million investment in the stock during the quarter. The following funds were also among the new ACET investors: Phill Gross and Robert Atchinson's Adage Capital Management, Benjamin A. Smith's Laurion Capital Management, and Warren Lammert's Granite Point Capital.
Let's check out hedge fund activity in other stocks similar to Adicet Bio Inc. (NASDAQ:ACET). We will take a look at Verrica Pharmaceuticals Inc. (NASDAQ:VRCA), CNB Financial Corporation (NASDAQ:CCNE), Tonix Pharmaceuticals Holding Corp. (NASDAQ:TNXP), Kala Pharmaceuticals, Inc. (NASDAQ:KALA), InfuSystem Holdings, Inc. (NYSE:INFU), Motorsport Games Inc. (NASDAQ:MSGM), and Luokung Technology Corp (NASDAQ:LKCO). This group of stocks' market values are closest to ACET's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VRCA,7,80284,3 CCNE,9,11190,1 TNXP,7,14182,6 KALA,16,130215,1 INFU,11,41418,-3 MSGM,6,13825,6 LKCO,1,118,-1 Average,8.1,41605,1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.1 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $157 million in ACET's case. Kala Pharmaceuticals, Inc. (NASDAQ:KALA) is the most popular stock in this table. On the other hand Luokung Technology Corp (NASDAQ:LKCO) is the least popular one with only 1 bullish hedge fund positions. Adicet Bio Inc. (NASDAQ:ACET) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ACET is 90. 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 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately ACET wasn't nearly as popular as these 5 stocks and hedge funds that were betting on ACET were disappointed as the stock returned -37.8% since the end of March (through 7/23) 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.