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 have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider PDL BioPharma Inc. (NASDAQ:PDLI) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
PDL BioPharma Inc. (NASDAQ:PDLI) shareholders have witnessed an increase in support from the world's most elite money managers of late. PDLI was in 17 hedge funds' portfolios at the end of the third quarter of 2019. There were 13 hedge funds in our database with PDLI positions at the end of the previous quarter. Our calculations also showed that PDLI 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.
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_189632" align="aligncenter" width="450"] David Harding of Winton Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds' buy/sell signals. We're going to take a look at the new hedge fund action regarding PDL BioPharma Inc. (NASDAQ:PDLI).
How have hedgies been trading PDL BioPharma Inc. (NASDAQ:PDLI)?
Heading into the fourth quarter of 2019, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 31% from the previous quarter. On the other hand, there were a total of 12 hedge funds with a bullish position in PDLI a year ago. With the smart money's sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in PDL BioPharma Inc. (NASDAQ:PDLI), which was worth $20.2 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $6.5 million worth of shares. D E Shaw, AQR Capital Management, and Winton Capital Management 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 Zebra Capital Management allocated the biggest weight to PDL BioPharma Inc. (NASDAQ:PDLI), around 0.17% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, earmarking 0.04 percent of its 13F equity portfolio to PDLI.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Tudor Investment Corp, managed by Paul Tudor Jones, assembled the most valuable position in PDL BioPharma Inc. (NASDAQ:PDLI). Tudor Investment Corp had $0.3 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also initiated a $0.2 million position during the quarter. The other funds with new positions in the stock are Michael Platt and William Reeves's BlueCrest Capital Mgmt. and Andre F. Perold's HighVista Strategies.
Let's go over hedge fund activity in other stocks similar to PDL BioPharma Inc. (NASDAQ:PDLI). These stocks are American Realty Investors, Inc. (NYSE:ARL), Kandi Technologies Group, Inc. (NASDAQ:KNDI), Superior Group of Companies, Inc. (NASDAQ:SGC), and Orrstown Financial Services, Inc. (NASDAQ:ORRF). All of these stocks' market caps resemble PDLI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ARL,1,569,0 KNDI,3,1747,0 SGC,3,4052,1 ORRF,3,10791,0 Average,2.5,4290,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.5 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $44 million in PDLI's case. Kandi Technologies Group, Inc. (NASDAQ:KNDI) is the most popular stock in this table. On the other hand American Realty Investors, Inc. (NYSE:ARL) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks PDL BioPharma Inc. (NASDAQ:PDLI) 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 PDLI as the stock returned 43.5% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.