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 750 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 Applied Therapeutics, Inc. (NASDAQ:APLT).
Applied Therapeutics, Inc. (NASDAQ:APLT) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds' portfolios at the end of September. At the end of this article we will also compare APLT to other stocks including Esquire Financial Holdings, Inc. (NASDAQ:ESQ), Transcat, Inc. (NASDAQ:TRNS), and Level One Bancorp, Inc. (NASDAQ:LEVL) to get a better sense of its popularity. Video: Click the image to 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 has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_27480" align="aligncenter" width="450"] Israel Englander of Millennium Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Now let's go over the new hedge fund action encompassing Applied Therapeutics, Inc. (NASDAQ:APLT).
Hedge fund activity in Applied Therapeutics, Inc. (NASDAQ:APLT)
Heading into the fourth quarter of 2019, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards APLT over the last 17 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, Knoll Capital Management held the most valuable stake in Applied Therapeutics, Inc. (NASDAQ:APLT), which was worth $5.1 million at the end of the third quarter. On the second spot was Alkeon Capital Management which amassed $4.4 million worth of shares. Millennium Management was 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 Knoll Capital Management allocated the biggest weight to Applied Therapeutics, Inc. (NASDAQ:APLT), around 4.7% of its 13F portfolio. Alkeon Capital Management is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to APLT.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now take a look at hedge fund activity in other stocks similar to Applied Therapeutics, Inc. (NASDAQ:APLT). We will take a look at Esquire Financial Holdings, Inc. (NASDAQ:ESQ), Transcat, Inc. (NASDAQ:TRNS), Level One Bancorp, Inc. (NASDAQ:LEVL), and GlycoMimetics, Inc. (NASDAQ:GLYC). This group of stocks' market values match APLT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ESQ,4,5325,0 TRNS,8,27978,0 LEVL,2,1339,1 GLYC,7,58509,-2 Average,5.25,23288,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $10 million in APLT's case. Transcat, Inc. (NASDAQ:TRNS) is the most popular stock in this table. On the other hand Level One Bancorp, Inc. (NASDAQ:LEVL) is the least popular one with only 2 bullish hedge fund positions. Applied Therapeutics, Inc. (NASDAQ:APLT) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on APLT as the stock returned 59.7% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.