We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Genfit SA (NASDAQ:GNFT).
Is Genfit SA (NASDAQ:GNFT) going to take off soon? Hedge funds are becoming less confident. The number of long hedge fund bets were trimmed by 2 lately. Our calculations also showed that GNFT isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). GNFT was in 4 hedge funds' portfolios at the end of September. There were 6 hedge funds in our database with GNFT positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most investors, hedge funds are assumed to be worthless, outdated investment tools of the past. While there are over 8000 funds in operation at present, Our researchers hone in on the moguls of this club, around 750 funds. These money managers shepherd bulk of the smart money's total asset base, and by observing their first-class stock picks, Insider Monkey has deciphered several investment strategies that have historically outperformed the S&P 500 index. Insider Monkey's flagship short hedge fund strategy defeated 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_27480" align="alignnone" width="600"] 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 check out the fresh hedge fund action encompassing Genfit SA (NASDAQ:GNFT).
How are hedge funds trading Genfit SA (NASDAQ:GNFT)?
At Q3's end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from the second quarter of 2019. By comparison, 0 hedge funds held shares or bullish call options in GNFT a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Great Point Partners, managed by Jeffrey Jay and David Kroin, holds the number one position in Genfit SA (NASDAQ:GNFT). Great Point Partners has a $11.9 million position in the stock, comprising 1.1% of its 13F portfolio. The second largest stake is held by Bihua Chen of Cormorant Asset Management, with a $5.2 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions include Israel Englander's Millennium Management, Paul Marshall and Ian Wace's Marshall Wace and . In terms of the portfolio weights assigned to each position Great Point Partners allocated the biggest weight to Genfit SA (NASDAQ:GNFT), around 1.1% of its 13F portfolio. Cormorant Asset Management is also relatively very bullish on the stock, dishing out 0.32 percent of its 13F equity portfolio to GNFT.
Due to the fact that Genfit SA (NASDAQ:GNFT) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of fund managers that slashed their positions entirely by the end of the third quarter. Interestingly, Samuel Isaly's OrbiMed Advisors said goodbye to the biggest stake of the "upper crust" of funds followed by Insider Monkey, worth about $22.2 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also said goodbye to its stock, about $0.7 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks similar to Genfit SA (NASDAQ:GNFT). We will take a look at Amerant Bancorp Inc. (NASDAQ:AMTB), Cortexyme, Inc. (NASDAQ:CRTX), Camden National Corporation (NASDAQ:CAC), and Vericel Corp (NASDAQ:VCEL). All of these stocks' market caps are closest to GNFT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMTB,4,7814,2 CRTX,3,2065,1 CAC,10,67925,0 VCEL,16,133611,-1 Average,8.25,52854,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was $20 million in GNFT's case. Vericel Corp (NASDAQ:VCEL) is the most popular stock in this table. On the other hand Cortexyme, Inc. (NASDAQ:CRTX) is the least popular one with only 3 bullish hedge fund positions. Genfit SA (NASDAQ:GNFT) is not the least popular stock in this group but hedge fund interest is still below average. 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 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. Unfortunately GNFT wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GNFT investors were disappointed as the stock returned -10.7% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.