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Is Capricor Therapeutics, Inc. (NASDAQ:CAPR) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Capricor Therapeutics, Inc. (NASDAQ:CAPR) investors should be aware of an increase in hedge fund interest in recent months. Capricor Therapeutics, Inc. (NASDAQ:CAPR) was in 3 hedge funds' portfolios at the end of March. The all time high for this statistic is 4. There were 2 hedge funds in our database with CAPR holdings at the end of December. Our calculations also showed that CAPR isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Adam Usdan of Trellus Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 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. Now let's review the key hedge fund action surrounding Capricor Therapeutics, Inc. (NASDAQ:CAPR).
Do Hedge Funds Think CAPR 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 50% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CAPR over the last 23 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Trellus Management Company held the most valuable stake in Capricor Therapeutics, Inc. (NASDAQ:CAPR), which was worth $1.3 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $0.4 million worth of shares. Citadel Investment Group 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 Trellus Management Company allocated the biggest weight to Capricor Therapeutics, Inc. (NASDAQ:CAPR), around 0.65% of its 13F portfolio. Citadel Investment Group is also relatively very bullish on the stock, designating 0.0001 percent of its 13F equity portfolio to CAPR.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Trellus Management Company, managed by Adam Usdan, assembled the largest position in Capricor Therapeutics, Inc. (NASDAQ:CAPR). Trellus Management Company had $1.3 million invested in the company at the end of the quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Capricor Therapeutics, Inc. (NASDAQ:CAPR) but similarly valued. We will take a look at Golden Minerals Co (NYSE:AUMN), Crexendo, Inc. (NASDAQ:CXDO), Armstrong Flooring, Inc. (NYSE:AFI), IRIDEX Corporation (NASDAQ:IRIX), Amplify Energy Corp. (NYSE:AMPY), Inpixon (NASDAQ:INPX), and U.S. Global Investors, Inc. (NASDAQ:GROW). This group of stocks' market caps are closest to CAPR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AUMN,2,69,1 CXDO,1,75,-2 AFI,8,22775,0 IRIX,3,5530,1 AMPY,12,12532,3 INPX,4,649,1 GROW,7,12564,2 Average,5.3,7742,0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.3 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $2 million in CAPR's case. Amplify Energy Corp. (NYSE:AMPY) is the most popular stock in this table. On the other hand Crexendo, Inc. (NASDAQ:CXDO) is the least popular one with only 1 bullish hedge fund positions. Capricor Therapeutics, Inc. (NASDAQ:CAPR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CAPR is 37.6. 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 CAPR wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CAPR investors were disappointed as the stock returned -4.9% 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.
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Disclosure: None. This article was originally published at Insider Monkey.