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After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Equillium, Inc. (NASDAQ:EQ).
Is Equillium, Inc. (NASDAQ:EQ) an outstanding investment now? Money managers were getting more bullish. The number of long hedge fund positions rose by 1 lately. Equillium, Inc. (NASDAQ:EQ) was in 5 hedge funds' portfolios at the end of September. The all time high for this statistics is 4. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EQ isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Siegel of Two Sigma Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we're going to review the key hedge fund action regarding Equillium, Inc. (NASDAQ:EQ).
How have hedgies been trading Equillium, Inc. (NASDAQ:EQ)?
At the end of September, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the previous quarter. By comparison, 3 hedge funds held shares or bullish call options in EQ a year ago. With the smart money's capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
More specifically, Samsara BioCapital was the largest shareholder of Equillium, Inc. (NASDAQ:EQ), with a stake worth $6.2 million reported as of the end of September. Trailing Samsara BioCapital was Farallon Capital, which amassed a stake valued at $4 million. Alyeska Investment Group, Renaissance Technologies, and Two Sigma Advisors were 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 Samsara BioCapital allocated the biggest weight to Equillium, Inc. (NASDAQ:EQ), around 1.73% of its 13F portfolio. Farallon Capital is also relatively very bullish on the stock, dishing out 0.03 percent of its 13F equity portfolio to EQ.
Consequently, some big names were breaking ground themselves. Samsara BioCapital, managed by Srini Akkaraju and Michael Dybbs, established the biggest position in Equillium, Inc. (NASDAQ:EQ). Samsara BioCapital had $6.2 million invested in the company at the end of the quarter. Farallon Capital also made a $4 million investment in the stock during the quarter. The only other fund with a brand new EQ position is John Overdeck and David Siegel's Two Sigma Advisors.
Let's also examine hedge fund activity in other stocks similar to Equillium, Inc. (NASDAQ:EQ). These stocks are Penns Woods Bancorp, Inc. (NASDAQ:PWOD), Western Copper and Gold Corporation (NYSE:WRN), Investar Holding Corporation (NASDAQ:ISTR), Celyad Oncology SA (NASDAQ:CYAD), MVC Capital, Inc. (NYSE:MVC), Chemung Financial Corp. (NASDAQ:CHMG), and Exterran Corporation (NYSE:EXTN). This group of stocks' market values are similar to EQ's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PWOD,1,3405,0 WRN,3,2356,1 ISTR,5,13211,1 CYAD,1,126,-1 MVC,8,38046,0 CHMG,3,7400,0 EXTN,11,7114,-3 Average,4.6,10237,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.6 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $12 million in EQ's case. Exterran Corporation (NYSE:EXTN) is the most popular stock in this table. On the other hand Penns Woods Bancorp, Inc. (NASDAQ:PWOD) is the least popular one with only 1 bullish hedge fund positions. Equillium, Inc. (NASDAQ:EQ) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EQ is 56. 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 positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and beat the market again by 16.1 percentage points. Unfortunately EQ wasn't nearly as popular as these 20 stocks and hedge funds that were betting on EQ were disappointed as the stock returned -14.7% since the end of September (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.