Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before the Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the first quarter, most investors recovered all of their Q4 losses as sentiment shifted and optimism dominated the US China trade negotiations. Nevertheless, many of the stocks that delivered strong returns in the first quarter still sport strong fundamentals and their gains were more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) changed recently.
Is Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) a buy here? Hedge funds are in an optimistic mood. The number of long hedge fund bets moved up by 3 recently. Our calculations also showed that IOVA isn't among the 30 most popular stocks among hedge funds.
In the eyes of most investors, hedge funds are viewed as unimportant, old financial vehicles of yesteryear. While there are over 8000 funds in operation at the moment, We choose to focus on the elite of this club, about 750 funds. It is estimated that this group of investors shepherd most of the smart money's total capital, and by tracking their highest performing stock picks, Insider Monkey has come up with various investment strategies that have historically outperformed the market. Insider Monkey's flagship hedge fund strategy outpaced the S&P 500 index by around 5 percentage points per annum since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
Let's take a peek at the new hedge fund action regarding Iovance Biotherapeutics, Inc. (NASDAQ:IOVA).
What have hedge funds been doing with Iovance Biotherapeutics, Inc. (NASDAQ:IOVA)?
Heading into the second quarter of 2019, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards IOVA over the last 15 quarters. With hedgies' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Joseph Edelman's Perceptive Advisors has the biggest position in Iovance Biotherapeutics, Inc. (NASDAQ:IOVA), worth close to $116.4 million, comprising 3.3% of its total 13F portfolio. Coming in second is venBio Select Advisor, managed by Behzad Aghazadeh, which holds a $100.1 million position; the fund has 4.3% of its 13F portfolio invested in the stock. Other peers that hold long positions include Thomas Steyer's Farallon Capital, Jeffrey Jay and David Kroin's Great Point Partners and Samuel Isaly's OrbiMed Advisors.
Now, key hedge funds have been driving this bullishness. Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, created the biggest position in Iovance Biotherapeutics, Inc. (NASDAQ:IOVA). Healthcor Management LP had $11.4 million invested in the company at the end of the quarter. Mitchell Blutt's Consonance Capital Management also initiated a $10.8 million position during the quarter. The other funds with new positions in the stock are John Osterweis's Osterweis Capital Management, Murray Stahl's Horizon Asset Management, and Mike Vranos's Ellington.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) but similarly valued. These stocks are Alamo Group, Inc. (NYSE:ALG), 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), Saul Centers Inc (NYSE:BFS), and ARMOUR Residential REIT, Inc. (NYSE:ARR). This group of stocks' market values resemble IOVA's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ALG,10,196006,-2 FLWS,19,88813,5 BFS,10,38051,3 ARR,8,73012,3 Average,11.75,98971,2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $564 million in IOVA's case. 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) is the most popular stock in this table. On the other hand ARMOUR Residential REIT, Inc. (NYSE:ARR) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on IOVA as the stock returned 87.5% during the same period 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.