The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Adverum Biotechnologies, Inc. (NASDAQ:ADVM) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Hedge fund interest in Adverum Biotechnologies, Inc. (NASDAQ:ADVM) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ADVM isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as American Assets Trust, Inc (NYSE:AAT), BEST Inc. (NYSE:BEST), and Flagstar Bancorp Inc (NYSE:FBC) to gather more data points. Our calculations also showed that ADVM isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Peter Kolchinsky of RA Capital Management
Now let's take a look at the recent hedge fund action encompassing Adverum Biotechnologies, Inc. (NASDAQ:ADVM).
What have hedge funds been doing with Adverum Biotechnologies, Inc. (NASDAQ:ADVM)?
At second quarter's end, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards ADVM over the last 20 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.
Of the funds tracked by Insider Monkey, Peter Kolchinsky's RA Capital Management has the biggest position in Adverum Biotechnologies, Inc. (NASDAQ:ADVM), worth close to $162.9 million, comprising 3.2% of its total 13F portfolio. The second most bullish fund manager is Avoro Capital Advisors (venBio Select Advisor), managed by Behzad Aghazadeh, which holds a $158.4 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish include Lawrence Kam's Sonic Capital, Samuel Isaly's OrbiMed Advisors and Eli Casdin's Casdin Capital. In terms of the portfolio weights assigned to each position Sonic Capital allocated the biggest weight to Adverum Biotechnologies, Inc. (NASDAQ:ADVM), around 42.72% of its 13F portfolio. Acuta Capital Partners is also relatively very bullish on the stock, designating 10.54 percent of its 13F equity portfolio to ADVM.
Judging by the fact that Adverum Biotechnologies, Inc. (NASDAQ:ADVM) has faced bearish sentiment from hedge fund managers, it's safe to say that there exists a select few funds who sold off their positions entirely last quarter. Interestingly, D. E. Shaw's D E Shaw sold off the largest position of the 750 funds monitored by Insider Monkey, totaling close to $0.6 million in stock, and Bruce Kovner's Caxton Associates LP was right behind this move, as the fund sold off about $0.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks similar to Adverum Biotechnologies, Inc. (NASDAQ:ADVM). We will take a look at American Assets Trust, Inc (NYSE:AAT), BEST Inc. (NYSE:BEST), Flagstar Bancorp Inc (NYSE:FBC), Yelp Inc (NYSE:YELP), Upwork Inc. (NASDAQ:UPWK), Verra Mobility Corporation (NASDAQ:VRRM), and Hilton Grand Vacations Inc. (NYSE:HGV). All of these stocks' market caps match ADVM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AAT,20,34529,5 BEST,6,18518,0 FBC,15,105503,0 YELP,27,381420,2 UPWK,25,236015,3 VRRM,25,247110,2 HGV,30,554675,1 Average,21.1,225396,1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $225 million. That figure was $703 million in ADVM's case. Hilton Grand Vacations Inc. (NYSE:HGV) is the most popular stock in this table. On the other hand BEST Inc. (NYSE:BEST) is the least popular one with only 6 bullish hedge fund positions. Adverum Biotechnologies, Inc. (NASDAQ:ADVM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ADVM is 71.4. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 21.3% in 2020 through September 25th and beat the market by 17.7 percentage points. Unfortunately ADVM wasn't nearly as popular as these 10 stocks and hedge funds that were betting on ADVM were disappointed as the stock returned -48.2% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.