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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 Dare Bioscience, Inc. (NASDAQ:DARE).
Is DARE a good stock to buy? Hedge fund interest in Dare Bioscience, Inc. (NASDAQ:DARE) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that DARE isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Hallmark Financial Services, Inc. (NASDAQ:HALL), United-Guardian, Inc. (NASDAQ:UG), and IF Bancorp Inc (NASDAQ:IROQ) to gather more data points.
In the financial world there are numerous methods stock market investors use to assess stocks. Some of the less known methods are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the elite investment managers can outclass their index-focused peers by a superb 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 .
Michael Gelband of ExodusPoint Capital
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. With all of this in mind let's take a look at the latest hedge fund action surrounding Dare Bioscience, Inc. (NASDAQ:DARE).
Do Hedge Funds Think DARE Is A Good Stock To Buy Now?
At Q1's end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2020. On the other hand, there were a total of 1 hedge funds with a bullish position in DARE a year ago. With hedgies' capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Dare Bioscience, Inc. (NASDAQ:DARE), which was worth $1.5 million at the end of the fourth quarter. On the second spot was Two Sigma Advisors which amassed $0.2 million worth of shares. ExodusPoint Capital was 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 Renaissance Technologies allocated the biggest weight to Dare Bioscience, Inc. (NASDAQ:DARE), around 0.0018% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, earmarking 0.0006 percent of its 13F equity portfolio to DARE.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. 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 ExodusPoint Capital).
Let's go over hedge fund activity in other stocks similar to Dare Bioscience, Inc. (NASDAQ:DARE). We will take a look at Hallmark Financial Services, Inc. (NASDAQ:HALL), United-Guardian, Inc. (NASDAQ:UG), IF Bancorp Inc (NASDAQ:IROQ), Datasea Inc. (NASDAQ:DTSS), ATIF Holdings Limited (NASDAQ:ATIF), Senmiao Technology Limited (NASDAQ:AIHS), and China Natural Resources, Inc. (NASDAQ:CHNR). This group of stocks' market values are closest to DARE's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HALL,9,3911,2 UG,2,6220,0 IROQ,2,5448,0 DTSS,1,125,0 ATIF,2,251,-1 AIHS,3,279,0 CHNR,3,589,0 Average,3.1,2403,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.1 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $2 million in DARE's case. Hallmark Financial Services, Inc. (NASDAQ:HALL) is the most popular stock in this table. On the other hand Datasea Inc. (NASDAQ:DTSS) is the least popular one with only 1 bullish hedge fund positions. Dare Bioscience, Inc. (NASDAQ:DARE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DARE is 47.5. 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 negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 surpassed the market again by 3.3 percentage points. Unfortunately DARE wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); DARE investors were disappointed as the stock returned -17.8% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Disclosure: None. This article was originally published at Insider Monkey.