Did Hedge Funds Drop The Ball On Aquestive Therapeutics, Inc. (AQST) ?
Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before last year's 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 half of 2019, 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 half 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 Aquestive Therapeutics, Inc. (NASDAQ:AQST) changed recently.
Aquestive Therapeutics, Inc. (NASDAQ:AQST) investors should be aware of a decrease in hedge fund interest in recent months. Our calculations also showed that AQST isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most traders, hedge funds are perceived as slow, outdated investment tools of years past. While there are more than 8000 funds with their doors open today, Our experts choose to focus on the bigwigs of this group, around 750 funds. These investment experts handle bulk of the smart money's total capital, and by paying attention to their finest stock picks, Insider Monkey has spotted many investment strategies that have historically defeated the S&P 500 index. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_27676" align="aligncenter" width="355"]
Israel Englander of Millennium Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Keeping this in mind let's take a glance at the fresh hedge fund action surrounding Aquestive Therapeutics, Inc. (NASDAQ:AQST).
Hedge fund activity in Aquestive Therapeutics, Inc. (NASDAQ:AQST)
At Q3's end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the second quarter of 2019. By comparison, 8 hedge funds held shares or bullish call options in AQST a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Aquestive Therapeutics, Inc. (NASDAQ:AQST) was held by Perceptive Advisors, which reported holding $6.7 million worth of stock at the end of September. It was followed by Millennium Management with a $0.3 million position. The only other hedge fund that is bullish on the company was Baker Bros. Advisors.
Because Aquestive Therapeutics, Inc. (NASDAQ:AQST) has experienced declining sentiment from hedge fund managers, we can see that there exists a select few fund managers that decided to sell off their positions entirely in the third quarter. At the top of the heap, James A. Silverman's Opaleye Management dumped the largest stake of the "upper crust" of funds monitored by Insider Monkey, comprising close to $2.5 million in stock, and Donald Sussman's Paloma Partners was right behind this move, as the fund dumped about $0.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds in the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to Aquestive Therapeutics, Inc. (NASDAQ:AQST). These stocks are Hunt Companies Finance Trust, Inc. (NYSE:HCFT), A. H. Belo Corporation (NYSE:AHC), Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS), and Intellicheck, Inc. (NYSE:IDN). This group of stocks' market values are similar to AQST's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HCFT,3,4995,-2 AHC,4,7685,1 SNSS,12,17107,1 IDN,1,192,0 Average,5,7495,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $7 million in AQST's case. Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS) is the most popular stock in this table. On the other hand Intellicheck, Inc. (NYSE:IDN) is the least popular one with only 1 bullish hedge fund positions. Aquestive Therapeutics, Inc. (NASDAQ:AQST) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on AQST as the stock returned 145% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
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