The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Neoleukin Therapeutics, Inc. (NASDAQ:NLTX) and determine whether the smart money was really smart about this stock.
Neoleukin Therapeutics, Inc. (NASDAQ:NLTX) has experienced a decrease in activity from the world's largest hedge funds of late. Neoleukin Therapeutics, Inc. (NASDAQ:NLTX) was in 19 hedge funds' portfolios at the end of June. The all time high for this statistics is 20. Our calculations also showed that NLTX isn't among the 30 most popular stocks among hedge funds (click for Q2 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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 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.
Oleg Nodelman of EcoR1 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 are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. With all of this in mind we're going to take a peek at the fresh hedge fund action regarding Neoleukin Therapeutics, Inc. (NASDAQ:NLTX).
What does smart money think about Neoleukin Therapeutics, Inc. (NASDAQ:NLTX)?
At Q2's end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards NLTX over the last 20 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Redmile Group was the largest shareholder of Neoleukin Therapeutics, Inc. (NASDAQ:NLTX), with a stake worth $67.1 million reported as of the end of September. Trailing Redmile Group was EcoR1 Capital, which amassed a stake valued at $58.7 million. Baker Bros. Advisors, Opaleye Management, and Renaissance Technologies 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 Opaleye Management allocated the biggest weight to Neoleukin Therapeutics, Inc. (NASDAQ:NLTX), around 4.69% of its 13F portfolio. EcoR1 Capital is also relatively very bullish on the stock, setting aside 4.34 percent of its 13F equity portfolio to NLTX.
Judging by the fact that Neoleukin Therapeutics, Inc. (NASDAQ:NLTX) has faced falling interest from the smart money, it's safe to say that there were a few hedge funds who were dropping their full holdings last quarter. It's worth mentioning that Samuel Isaly's OrbiMed Advisors said goodbye to the largest stake of all the hedgies watched by Insider Monkey, valued at close to $10.5 million in stock, and Doron Breen and Mori Arkin's Sphera Global Healthcare Fund was right behind this move, as the fund said goodbye to about $4.5 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 1 funds last quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Neoleukin Therapeutics, Inc. (NASDAQ:NLTX) but similarly valued. These stocks are G-III Apparel Group, Ltd. (NASDAQ:GIII), OneSmart International Education Group Limited (NYSE:ONE), Century Aluminum Co (NASDAQ:CENX), Akouos, Inc. (NASDAQ:AKUS), Seritage Growth Properties (NYSE:SRG), Oceaneering International (NYSE:OII), and Star Bulk Carriers Corp. (NASDAQ:SBLK). All of these stocks' market caps resemble NLTX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GIII,10,39497,-7 ONE,6,52707,-1 CENX,12,30570,0 AKUS,20,198797,20 SRG,18,130438,1 OII,17,42223,-2 SBLK,7,289095,-4 Average,12.9,111904,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.9 hedge funds with bullish positions and the average amount invested in these stocks was $112 million. That figure was $254 million in NLTX's case. Akouos, Inc. (NASDAQ:AKUS) is the most popular stock in this table. On the other hand OneSmart International Education Group Limited (NYSE:ONE) is the least popular one with only 6 bullish hedge fund positions. Neoleukin Therapeutics, Inc. (NASDAQ:NLTX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NLTX is 78.9. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately NLTX wasn't nearly as popular as these 10 stocks and hedge funds that were betting on NLTX were disappointed as the stock returned -27.7% in Q3 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.