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Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter of 2018. Trends reversed 180 degrees in 2019 amid Powell's pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the third quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Arbutus Biopharma Corp (NASDAQ:ABUS).
Hedge fund interest in Arbutus Biopharma Corp (NASDAQ:ABUS) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Security National Financial Corp. (NASDAQ:SNFCA), Permianville Royalty Trust (NASDAQ:PVL), and Beasley Broadcast Group Inc (NASDAQ:BBGI) to gather more data points. Our calculations also showed that ABUS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 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.
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 based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We're going to take a peek at the latest hedge fund action surrounding Arbutus Biopharma Corp (NASDAQ:ABUS).
How have hedgies been trading Arbutus Biopharma Corp (NASDAQ:ABUS)?
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in ABUS a year ago. With hedge funds' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Hudson Bay Capital Management held the most valuable stake in Arbutus Biopharma Corp (NASDAQ:ABUS), which was worth $1.4 million at the end of the third quarter. On the second spot was Millennium Management which amassed $0.5 million worth of shares. Renaissance Technologies, Winton Capital Management, and Two Sigma Advisors 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 Hudson Bay Capital Management allocated the biggest weight to Arbutus Biopharma Corp (NASDAQ:ABUS), around 0.04% of its 13F portfolio. LMR Partners is also relatively very bullish on the stock, setting aside 0.0022 percent of its 13F equity portfolio to ABUS.
Seeing as Arbutus Biopharma Corp (NASDAQ:ABUS) has experienced a decline in interest from the aggregate hedge fund industry, we can see that there exists a select few hedgies that slashed their full holdings heading into Q4. At the top of the heap, Donald Sussman's Paloma Partners said goodbye to the largest stake of the 750 funds monitored by Insider Monkey, valued at about $0.3 million in stock, and David E. Shaw's D E Shaw was right behind this move, as the fund cut about $0 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks similar to Arbutus Biopharma Corp (NASDAQ:ABUS). These stocks are Security National Financial Corp. (NASDAQ:SNFCA), Permianville Royalty Trust (NASDAQ:PVL), Beasley Broadcast Group Inc (NASDAQ:BBGI), and PB Bancorp, Inc. (NASDAQ:PBBI). All of these stocks' market caps are closest to ABUS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SNFCA,1,812,0 PVL,2,436,1 BBGI,4,5076,0 PBBI,4,5008,1 Average,2.75,2833,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.75 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $3 million in ABUS's case. Beasley Broadcast Group Inc (NASDAQ:BBGI) is the most popular stock in this table. On the other hand Security National Financial Corp. (NASDAQ:SNFCA) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Arbutus Biopharma Corp (NASDAQ:ABUS) is more popular among hedge funds. 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. Hedge funds were also right about betting on ABUS, though not to the same extent, as the stock returned 9.2% during the fourth quarter (through the end of November) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.