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Hedge Funds Cutting Exposure To LogicBio Therapeutics, Inc. (LOGC)

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In this article we will take a look at whether hedge funds think LogicBio Therapeutics, Inc. (NASDAQ:LOGC) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

LogicBio Therapeutics, Inc. (NASDAQ:LOGC) shareholders have witnessed a decrease in activity from the world's largest hedge funds of late. LOGC was in 4 hedge funds' portfolios at the end of March. There were 5 hedge funds in our database with LOGC holdings at the end of the previous quarter. Our calculations also showed that LOGC 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 51 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_736153" align="aligncenter" width="399"]

Didric Cederholm Lion Point Capital
Didric Cederholm Lion Point Capital

Didric Cederholm of Lion Point Capital[/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 trades like this one. 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 we're going to take a peek at the latest hedge fund action encompassing LogicBio Therapeutics, Inc. (NASDAQ:LOGC).

How are hedge funds trading LogicBio Therapeutics, Inc. (NASDAQ:LOGC)?

Heading into the second quarter of 2020, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the fourth quarter of 2019. By comparison, 6 hedge funds held shares or bullish call options in LOGC a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, OrbiMed Advisors, managed by Samuel Isaly, holds the biggest position in LogicBio Therapeutics, Inc. (NASDAQ:LOGC). OrbiMed Advisors has a $31.9 million position in the stock, comprising 0.5% of its 13F portfolio. Sitting at the No. 2 spot is Phill Gross and Robert Atchinson of Adage Capital Management, with a $4.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism comprise Robert Pohly's Samlyn Capital, Didric Cederholm's Lion Point and . In terms of the portfolio weights assigned to each position Lion Point allocated the biggest weight to LogicBio Therapeutics, Inc. (NASDAQ:LOGC), around 0.65% of its 13F portfolio. OrbiMed Advisors is also relatively very bullish on the stock, dishing out 0.54 percent of its 13F equity portfolio to LOGC.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Sio Capital. 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 LOGC as a viable investment and initiated a position in the stock.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as LogicBio Therapeutics, Inc. (NASDAQ:LOGC) but similarly valued. These stocks are Mustang Bio, Inc. (NASDAQ:MBIO), Safeguard Scientifics, Inc (NYSE:SFE), Lydall, Inc. (NYSE:LDL), and La Jolla Pharmaceutical Company (NASDAQ:LJPC). All of these stocks' market caps are similar to LOGC's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MBIO,9,6461,1 SFE,11,10703,-2 LDL,14,12698,3 LJPC,5,34781,-1 Average,9.75,16161,0.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $43 million in LOGC's case. Lydall, Inc. (NYSE:LDL) is the most popular stock in this table. On the other hand La Jolla Pharmaceutical Company (NASDAQ:LJPC) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks LogicBio Therapeutics, Inc. (NASDAQ:LOGC) is even less popular than LJPC. Hedge funds clearly dropped the ball on LOGC 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on LOGC as the stock returned 38.9% so far in the second quarter and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.

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