The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. What do these smart investors think about MediciNova, Inc. (NASDAQ:MNOV)?
MediciNova, Inc. (NASDAQ:MNOV) has experienced a decrease in enthusiasm from smart money in recent months. Our calculations also showed that MNOV isn't among the 30 most popular stocks among hedge funds (click for Q1 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 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 58 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.
[caption id="attachment_26340" align="aligncenter" width="400"] Ken Griffin of Citadel Investment Group[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's take a peek at the fresh hedge fund action regarding MediciNova, Inc. (NASDAQ:MNOV).
How are hedge funds trading MediciNova, Inc. (NASDAQ:MNOV)?
At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards MNOV over the last 18 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in MediciNova, Inc. (NASDAQ:MNOV) was held by Renaissance Technologies, which reported holding $0.9 million worth of stock at the end of September. It was followed by D E Shaw with a $0.3 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and Marshall Wace LLP. In terms of the portfolio weights assigned to each position HighVista Strategies allocated the biggest weight to MediciNova, Inc. (NASDAQ:MNOV), around 0.04% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.0009 percent of its 13F equity portfolio to MNOV.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Paloma Partners. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified MNOV as a viable investment and initiated a position in the stock.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as MediciNova, Inc. (NASDAQ:MNOV) but similarly valued. These stocks are Menlo Therapeutics Inc. (NASDAQ:MNLO), Ovid Therapeutics Inc. (NASDAQ:OVID), Jounce Therapeutics, Inc. (NASDAQ:JNCE), and FedNat Holding Co (NASDAQ:FNHC). This group of stocks' market caps are closest to MNOV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MNLO,18,53964,11 OVID,12,18770,-5 JNCE,10,8854,-6 FNHC,7,12007,1 Average,11.75,23399,0.25 [/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 $23 million. That figure was $1 million in MNOV's case. Menlo Therapeutics Inc. (NASDAQ:MNLO) is the most popular stock in this table. On the other hand FedNat Holding Co (NASDAQ:FNHC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks MediciNova, Inc. (NASDAQ:MNOV) is even less popular than FNHC. Hedge funds clearly dropped the ball on MNOV as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on MNOV as the stock returned 54.2% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.