Is Aldeyra Therapeutics Inc (ALDX) A Good Stock To Buy?
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 Aldeyra Therapeutics Inc (NASDAQ:ALDX).
Is ALDX a good stock to buy? Hedge fund interest in Aldeyra Therapeutics Inc (NASDAQ:ALDX) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ALDX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare ALDX to other stocks including HighPeak Energy, Inc. (NASDAQ:HPK), Hess Midstream LP (NYSE:HESM), and Duluth Holdings Inc. (NASDAQ:DLTH) to get a better sense of its popularity.
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David Siegel of Two Sigma Advisors
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Do Hedge Funds Think ALDX Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 12 hedge funds with a bullish position in ALDX a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Perceptive Advisors was the largest shareholder of Aldeyra Therapeutics Inc (NASDAQ:ALDX), with a stake worth $103.4 million reported as of the end of March. Trailing Perceptive Advisors was Two Sigma Advisors, which amassed a stake valued at $9.9 million. Woodline Partners, Ghost Tree Capital, and Millennium Management 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 Prosight Capital allocated the biggest weight to Aldeyra Therapeutics Inc (NASDAQ:ALDX), around 4.61% of its 13F portfolio. SilverArc Capital is also relatively very bullish on the stock, dishing out 2.09 percent of its 13F equity portfolio to ALDX.
Because Aldeyra Therapeutics Inc (NASDAQ:ALDX) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there is a sect of hedgies who were dropping their positions entirely last quarter. It's worth mentioning that Steve Cohen's Point72 Asset Management dumped the biggest position of the 750 funds monitored by Insider Monkey, worth an estimated $5.9 million in stock. Fred Knoll's fund, Knoll Capital Management, also dropped its stock, about $3.9 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Aldeyra Therapeutics Inc (NASDAQ:ALDX) but similarly valued. We will take a look at HighPeak Energy, Inc. (NASDAQ:HPK), Hess Midstream LP (NYSE:HESM), Duluth Holdings Inc. (NASDAQ:DLTH), Earthstone Energy, Inc. (NYSE:ESTE), Banco BBVA Argentina S.A. (NYSE:BBAR), Ennis, Inc. (NYSE:EBF), and Agenus Inc (NASDAQ:AGEN). This group of stocks' market valuations are similar to ALDX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HPK,7,2296,6 HESM,9,23621,2 DLTH,7,12684,-5 ESTE,8,15574,2 BBAR,4,3005,0 EBF,8,70320,0 AGEN,12,48916,1 Average,7.9,25202,0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.9 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $154 million in ALDX's case. Agenus Inc (NASDAQ:AGEN) is the most popular stock in this table. On the other hand Banco BBVA Argentina S.A. (NYSE:BBAR) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Aldeyra Therapeutics Inc (NASDAQ:ALDX) is more popular among hedge funds. Our overall hedge fund sentiment score for ALDX is 81.8. 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. 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 still beat the market by 10.1 percentage points. Unfortunately ALDX wasn't nearly as popular as these 5 stocks and hedge funds that were betting on ALDX were disappointed as the stock returned -23.7% since the end of the first quarter (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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
