With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Anika Therapeutics, Inc. (NASDAQ:ANIK).
Is Anika Therapeutics, Inc. (NASDAQ:ANIK) worth your attention right now? Investors who are in the know are becoming less confident. The number of long hedge fund bets decreased by 3 lately. Our calculations also showed that ANIK isn't among the 30 most popular stocks among hedge funds.
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 market by 18 percentage points since May 2014 through December 3, 2018 (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.
We're going to view the new hedge fund action encompassing Anika Therapeutics, Inc. (NASDAQ:ANIK).
Hedge fund activity in Anika Therapeutics, Inc. (NASDAQ:ANIK)
Heading into the fourth quarter of 2018, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the second quarter of 2018. On the other hand, there were a total of 18 hedge funds with a bullish position in ANIK at the beginning of this year. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, Engaged Capital was the largest shareholder of Anika Therapeutics, Inc. (NASDAQ:ANIK), with a stake worth $16.3 million reported as of the end of September. Trailing Engaged Capital was Renaissance Technologies, which amassed a stake valued at $11.4 million. D E Shaw, Portolan Capital Management, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Since Anika Therapeutics, Inc. (NASDAQ:ANIK) has experienced declining sentiment from hedge fund managers, it's easy to see that there is a sect of funds who sold off their positions entirely in the third quarter. It's worth mentioning that Phill Gross and Robert Atchinson's Adage Capital Management cut the biggest investment of the 700 funds followed by Insider Monkey, valued at an estimated $2.7 million in stock, and Dmitry Balyasny's Balyasny Asset Management was right behind this move, as the fund said goodbye to about $0.4 million worth. These transactions are important to note, as total hedge fund interest was cut by 3 funds in the third quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Anika Therapeutics, Inc. (NASDAQ:ANIK) but similarly valued. These stocks are ArQule, Inc. (NASDAQ:ARQL), Luther Burbank Corporation (NASDAQ:LBC), Mistras Group, Inc. (NYSE:MG), and Nuveen California AMT-Free Quality Municipal Income Fund (NYSE:NKX). This group of stocks' market caps are similar to ANIK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ARQL,23,176125,8 LBC,5,36150,-1 MG,13,46145,4 NKX,4,16653,0 Average,11.25,68768,2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $61 million in ANIK's case. ArQule, Inc. (NASDAQ:ARQL) is the most popular stock in this table. On the other hand Nuveen California AMT-Free Quality Municipal Income Fund (NYSE:NKX) is the least popular one with only 4 bullish hedge fund positions. Anika Therapeutics, Inc. (NASDAQ:ANIK) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. In this regard ARQL might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.