Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of PolarityTE, Inc. (NASDAQ:PTE) based on that data and determine whether they were really smart about the stock.
Is PolarityTE, Inc. (NASDAQ:PTE) a buy here? Money managers were buying. The number of long hedge fund positions inched up by 3 lately. Our calculations also showed that PTE isn't among the 30 most popular stocks among hedge funds (click for Q1 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 58 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.
[caption id="attachment_262340" align="aligncenter" width="392"] Arthur B Cohen and Joseph Healey of Healthcor Management LP[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let's take a glance at the recent hedge fund action surrounding PolarityTE, Inc. (NASDAQ:PTE).
What have hedge funds been doing with PolarityTE, Inc. (NASDAQ:PTE)?
At Q1's end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38% from the fourth quarter of 2019. By comparison, 10 hedge funds held shares or bullish call options in PTE a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Castle Hook Partners, managed by Josh Donfeld and David Rogers, holds the largest position in PolarityTE, Inc. (NASDAQ:PTE). Castle Hook Partners has a $1.3 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Guy Shahar of DSAM Partners, with a $1 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish encompass Arthur B Cohen and Joseph Healey's Healthcor Management LP, Anand Parekh's Alyeska Investment Group and Hal Mintz's Sabby Capital. In terms of the portfolio weights assigned to each position DSAM Partners allocated the biggest weight to PolarityTE, Inc. (NASDAQ:PTE), around 0.18% of its 13F portfolio. Sabby Capital is also relatively very bullish on the stock, setting aside 0.16 percent of its 13F equity portfolio to PTE.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Alyeska Investment Group, managed by Anand Parekh, created the most outsized position in PolarityTE, Inc. (NASDAQ:PTE). Alyeska Investment Group had $0.5 million invested in the company at the end of the quarter. Hal Mintz's Sabby Capital also made a $0.4 million investment in the stock during the quarter. The only other fund with a new position in the stock is Michael Gelband's ExodusPoint Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as PolarityTE, Inc. (NASDAQ:PTE) but similarly valued. We will take a look at Opiant Pharmaceuticals, Inc. (NASDAQ:OPNT), Envision Solar International, Inc. (NASDAQ:EVSI), Soligenix, Inc. (NASDAQ:SNGX), and Synacor Inc (NASDAQ:SYNC). All of these stocks' market caps are closest to PTE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OPNT,4,7261,1 EVSI,4,3003,1 SNGX,3,2246,1 SYNC,4,6128,-2 Average,3.75,4660,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.75 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $5 million in PTE's case. Opiant Pharmaceuticals, Inc. (NASDAQ:OPNT) is the most popular stock in this table. On the other hand Soligenix, Inc. (NASDAQ:SNGX) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks PolarityTE, Inc. (NASDAQ:PTE) is more popular among hedge funds. 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 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. Unfortunately PTE wasn't nearly as popular as these 10 stocks and hedge funds that were betting on PTE were disappointed as the stock returned 14.8% during the second quarter 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.