Is Avid Bioservices, Inc. (NASDAQ:CDMO) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Avid Bioservices, Inc. (NASDAQ:CDMO) has experienced a decrease in support from the world's most elite money managers in recent months. CDMO was in 9 hedge funds' portfolios at the end of March. There were 11 hedge funds in our database with CDMO positions at the end of the previous quarter. Our calculations also showed that CDMO isn't among the 30 most popular stocks among hedge funds.
If you'd ask most shareholders, hedge funds are perceived as worthless, outdated financial tools of yesteryear. While there are more than 8000 funds in operation today, We look at the upper echelon of this club, approximately 750 funds. These investment experts command the lion's share of the smart money's total capital, and by paying attention to their highest performing stock picks, Insider Monkey has deciphered numerous investment strategies that have historically outrun the market. Insider Monkey's flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points a year since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
We're going to go over the key hedge fund action regarding Avid Bioservices, Inc. (NASDAQ:CDMO).
What have hedge funds been doing with Avid Bioservices, Inc. (NASDAQ:CDMO)?
At Q1's end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from the fourth quarter of 2018. By comparison, 5 hedge funds held shares or bullish call options in CDMO a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Iszo Capital held the most valuable stake in Avid Bioservices, Inc. (NASDAQ:CDMO), which was worth $13.8 million at the end of the first quarter. On the second spot was Marshall Wace LLP which amassed $1.2 million worth of shares. Moreover, Renaissance Technologies, Millennium Management, and Zebra Capital Management were also bullish on Avid Bioservices, Inc. (NASDAQ:CDMO), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Avid Bioservices, Inc. (NASDAQ:CDMO) has experienced falling interest from the aggregate hedge fund industry, we can see that there is a sect of fund managers who were dropping their positions entirely in the third quarter. Interestingly, Richard Driehaus's Driehaus Capital dumped the biggest investment of the 700 funds monitored by Insider Monkey, totaling an estimated $3.2 million in stock, and Gregory Bylinsky and Jefferson Gramm's Bandera Partners was right behind this move, as the fund dumped about $1.6 million worth. These transactions are interesting, as total hedge fund interest dropped by 2 funds in the third quarter.
Let's also examine hedge fund activity in other stocks similar to Avid Bioservices, Inc. (NASDAQ:CDMO). These stocks are Culp, Inc. (NYSE:CULP), Ramaco Resources, Inc. (NASDAQ:METC), Northrim BanCorp, Inc. (NASDAQ:NRIM), and Oil-Dri Corporation of America (NYSE:ODC). This group of stocks' market values match CDMO's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CULP,5,18330,1 METC,6,9841,0 NRIM,7,22907,1 ODC,3,29967,-2 Average,5.25,20261,0 [/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 $20 million. That figure was $16 million in CDMO's case. Northrim BanCorp, Inc. (NASDAQ:NRIM) is the most popular stock in this table. On the other hand Oil-Dri Corporation of America (NYSE:ODC) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Avid Bioservices, Inc. (NASDAQ:CDMO) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately CDMO wasn't nearly as popular as these 20 stocks and hedge funds that were betting on CDMO were disappointed as the stock returned -8.2% during the same 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.