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Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Clearside Biomedical, Inc. (NASDAQ:CLSD).
Is Clearside Biomedical, Inc. (NASDAQ:CLSD) an excellent stock to buy now? Money managers were taking a bullish view. The number of bullish hedge fund positions advanced by 2 recently. Clearside Biomedical, Inc. (NASDAQ:CLSD) was in 6 hedge funds' portfolios at the end of March. The all time high for this statistic is 15. Our calculations also showed that CLSD isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
To the average investor there are numerous signals shareholders put to use to value stocks. A pair of the most under-the-radar signals are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the top money managers can outperform the market by a healthy margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
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At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let's take a look at the new hedge fund action encompassing Clearside Biomedical, Inc. (NASDAQ:CLSD).
Do Hedge Funds Think CLSD Is A Good Stock To Buy Now?
At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CLSD over the last 23 quarters. With hedgies' sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Manfred Yu's Acuta Capital Partners has the largest position in Clearside Biomedical, Inc. (NASDAQ:CLSD), worth close to $4 million, corresponding to 1.4% of its total 13F portfolio. Sitting at the No. 2 spot is John Overdeck and David Siegel of Two Sigma Advisors, with a $1.6 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish consist of Renaissance Technologies, Israel Englander's Millennium Management and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Acuta Capital Partners allocated the biggest weight to Clearside Biomedical, Inc. (NASDAQ:CLSD), around 1.44% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, earmarking 0.0044 percent of its 13F equity portfolio to CLSD.
With a general bullishness amongst the heavyweights, key money managers have jumped into Clearside Biomedical, Inc. (NASDAQ:CLSD) headfirst. Citadel Investment Group, managed by Ken Griffin, assembled the most valuable position in Clearside Biomedical, Inc. (NASDAQ:CLSD). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also made a $0 million investment in the stock during the quarter.
Let's now take a look at hedge fund activity in other stocks similar to Clearside Biomedical, Inc. (NASDAQ:CLSD). These stocks are Graham Corporation (NYSE:GHM), BM Technologies, Inc. (NYSE:BMTX), Alithya Group inc. (NASDAQ:ALYA), Titan Medical Inc. (NASDAQ:TMDI), SandRidge Energy Inc. (NYSE:SD), Oak Valley Bancorp (NASDAQ:OVLY), and Aziyo Biologics, Inc. (NASDAQ:AZYO). This group of stocks' market valuations resemble CLSD's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GHM,8,17509,0 BMTX,10,9398,10 ALYA,4,10924,0 TMDI,4,2237,-2 SD,18,40591,5 OVLY,1,498,0 AZYO,6,15198,-1 Average,7.3,13765,1.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.3 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $8 million in CLSD's case. SandRidge Energy Inc. (NYSE:SD) is the most popular stock in this table. On the other hand Oak Valley Bancorp (NASDAQ:OVLY) is the least popular one with only 1 bullish hedge fund positions. Clearside Biomedical, Inc. (NASDAQ:CLSD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CLSD is 33.7. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. A small number of hedge funds were also right about betting on CLSD as the stock returned 99.2% since the end of the first quarter (through 6/25) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.