In this article we will check out the progression of hedge fund sentiment towards Viela Bio, Inc. (NASDAQ:VIE) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Hedge fund interest in Viela Bio, Inc. (NASDAQ:VIE) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Federated Hermes, Inc. (NYSE:FHI), Louisiana-Pacific Corporation (NYSE:LPX), and Telephone & Data Systems, Inc. (NYSE:TDS) to gather more data points. Our calculations also showed that VIE 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.
In today’s marketplace there are a lot of metrics stock traders can use to analyze publicly traded companies. Two of the less known metrics are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the best money managers can trounce their index-focused peers by a healthy margin (see the details here).
[caption id="attachment_26082" align="aligncenter" width="399"] Andreas Halvorsen of Viking Global[/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 recent hedge fund action encompassing Viela Bio, Inc. (NASDAQ:VIE).
Hedge fund activity in Viela Bio, Inc. (NASDAQ:VIE)
At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2019. By comparison, 0 hedge funds held shares or bullish call options in VIE a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Lei Zhang's Hillhouse Capital Management has the biggest position in Viela Bio, Inc. (NASDAQ:VIE), worth close to $174.5 million, comprising 2.4% of its total 13F portfolio. Sitting at the No. 2 spot is Cormorant Asset Management, managed by Bihua Chen, which holds a $67 million position; 3.1% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism comprise Andreas Halvorsen's Viking Global, Michael Gelband's ExodusPoint Capital and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Cormorant Asset Management allocated the biggest weight to Viela Bio, Inc. (NASDAQ:VIE), around 3.11% of its 13F portfolio. Hillhouse Capital Management is also relatively very bullish on the stock, dishing out 2.35 percent of its 13F equity portfolio to VIE.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: D E Shaw. 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 only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was ExodusPoint Capital).
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Viela Bio, Inc. (NASDAQ:VIE) but similarly valued. These stocks are Federated Hermes, Inc. (NYSE:FHI), Louisiana-Pacific Corporation (NYSE:LPX), Telephone & Data Systems, Inc. (NYSE:TDS), and Trinity Industries, Inc. (NYSE:TRN). This group of stocks' market valuations resemble VIE's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FHI,28,114653,-1 LPX,26,326375,-3 TDS,21,149832,-1 TRN,18,621944,-9 Average,23.25,303201,-3.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $303 million. That figure was $291 million in VIE's case. Federated Hermes, Inc. (NYSE:FHI) is the most popular stock in this table. On the other hand Trinity Industries, Inc. (NYSE:TRN) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Viela Bio, Inc. (NASDAQ:VIE) is even less popular than TRN. Hedge funds clearly dropped the ball on VIE 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 VIE as the stock returned 36.7% 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.