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In this article we are going to use hedge fund sentiment as a tool and determine whether Anika Therapeutics, Inc. (NASDAQ:ANIK) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is ANIK a good stock to buy? Anika Therapeutics, Inc. (NASDAQ:ANIK) has seen an increase in support from the world's most elite money managers of late. Anika Therapeutics, Inc. (NASDAQ:ANIK) was in 15 hedge funds' portfolios at the end of September. The all time high for this statistic is 19. There were 13 hedge funds in our database with ANIK holdings at the end of June. Our calculations also showed that ANIK isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Michael Castor of Sio Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind let's take a look at the recent hedge fund action encompassing Anika Therapeutics, Inc. (NASDAQ:ANIK).
Do Hedge Funds Think ANIK Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from the previous quarter. By comparison, 18 hedge funds held shares or bullish call options in ANIK 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.
More specifically, Renaissance Technologies was the largest shareholder of Anika Therapeutics, Inc. (NASDAQ:ANIK), with a stake worth $29.6 million reported as of the end of September. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $5.9 million. Sio Capital, Two Sigma Advisors, and ZWEIG DIMENNA PARTNERS 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 Sio Capital allocated the biggest weight to Anika Therapeutics, Inc. (NASDAQ:ANIK), around 0.66% of its 13F portfolio. Diker Management is also relatively very bullish on the stock, setting aside 0.48 percent of its 13F equity portfolio to ANIK.
Consequently, key hedge funds were leading the bulls' herd. Parian Global Management, managed by Zachary Miller, assembled the largest position in Anika Therapeutics, Inc. (NASDAQ:ANIK). Parian Global Management had $0.8 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also initiated a $0.4 million position during the quarter. The only other fund with a brand new ANIK position is Michael Gelband's ExodusPoint Capital.
Let's go over hedge fund activity in other stocks similar to Anika Therapeutics, Inc. (NASDAQ:ANIK). These stocks are Lakeland Bancorp, Inc. (NASDAQ:LBAI), Origin Bancorp, Inc. (NASDAQ:OBNK), TCG BDC, Inc. (NASDAQ:CGBD), Neoleukin Therapeutics, Inc. (NASDAQ:NLTX), Fusion Pharmaceuticals Inc. (NASDAQ:FUSN), Extreme Networks, Inc (NASDAQ:EXTR), and CymaBay Therapeutics Inc (NASDAQ:CBAY). This group of stocks' market caps match ANIK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LBAI,11,22382,-2 OBNK,6,9369,0 CGBD,6,28998,-2 NLTX,19,196607,0 FUSN,10,139823,-9 EXTR,16,68641,-2 CBAY,18,209182,-6 Average,12.3,96429,-3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.3 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $53 million in ANIK's case. Neoleukin Therapeutics, Inc. (NASDAQ:NLTX) is the most popular stock in this table. On the other hand Origin Bancorp, Inc. (NASDAQ:OBNK) is the least popular one with only 6 bullish hedge fund positions. Anika Therapeutics, Inc. (NASDAQ:ANIK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ANIK is 65.3. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately ANIK wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ANIK were disappointed as the stock returned 8.6% since the end of September (through 12/14) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 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.