Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Cleveland BioLabs, Inc. (NASDAQ:CBLI).
Is CBLI a good stock to buy now? Cleveland BioLabs, Inc. (NASDAQ:CBLI) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds' portfolios at the end of the first quarter of 2021. Our calculations also showed that CBLI isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare CBLI to other stocks including AMREP Corporation (NYSE:AXR), Fauquier Bankshares, Inc. (NASDAQ:FBSS), and Synalloy Corporation (NASDAQ:SYNL) to get a better sense of its popularity.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Ken Griffin of Citadel Investment Group
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $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 peek at the key hedge fund action regarding Cleveland BioLabs, Inc. (NASDAQ:CBLI).
Do Hedge Funds Think CBLI Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CBLI over the last 23 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in Cleveland BioLabs, Inc. (NASDAQ:CBLI) was held by Sabby Capital, which reported holding $2.5 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $0.7 million position. The only other hedge fund that is bullish on the company was Citadel Investment Group.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Armistice Capital. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Sabby Capital).
Let's check out hedge fund activity in other stocks similar to Cleveland BioLabs, Inc. (NASDAQ:CBLI). These stocks are AMREP Corporation (NYSE:AXR), Fauquier Bankshares, Inc. (NASDAQ:FBSS), Synalloy Corporation (NASDAQ:SYNL), Cellectar Biosciences, Inc. (NASDAQ:CLRB), LightPath Technologies, Inc. (NASDAQ:LPTH), Capital Senior Living Corporation (NYSE:CSU), and BP Prudhoe Bay Royalty Trust (NYSE:BPT). This group of stocks' market caps are similar to CBLI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AXR,2,3224,0 FBSS,3,8749,0 SYNL,3,2840,0 CLRB,8,14591,-5 LPTH,4,14389,-1 CSU,2,15413,-1 BPT,2,170,1 Average,3.4,8482,-0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.4 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $3 million in CBLI's case. Cellectar Biosciences, Inc. (NASDAQ:CLRB) is the most popular stock in this table. On the other hand AMREP Corporation (NYSE:AXR) is the least popular one with only 2 bullish hedge fund positions. Cleveland BioLabs, Inc. (NASDAQ:CBLI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CBLI is 43.3. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on CBLI as the stock returned 11% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.