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Do Hedge Funds Love CASI Pharmaceuticals Inc (CASI)?

Asma UL Husna

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of CASI Pharmaceuticals Inc (NASDAQ:CASI).

CASI Pharmaceuticals Inc (NASDAQ:CASI) investors should pay attention to an increase in activity from the world's largest hedge funds in recent months. CASI was in 4 hedge funds' portfolios at the end of March. There were 3 hedge funds in our database with CASI holdings at the end of the previous quarter. Our calculations also showed that CASI 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 44 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_728717" align="aligncenter" width="399"] Roger Ibbotson of Zebra Capital Management[/caption]

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to take a look at the recent hedge fund action encompassing CASI Pharmaceuticals Inc (NASDAQ:CASI).

What does smart money think about CASI Pharmaceuticals Inc (NASDAQ:CASI)?

At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the fourth quarter of 2019. By comparison, 4 hedge funds held shares or bullish call options in CASI a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Ikarian Capital, managed by Neil Shahrestani, holds the largest position in CASI Pharmaceuticals Inc (NASDAQ:CASI). Ikarian Capital has a $2.1 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Winton Capital Management, led by David Harding, holding a $0.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors with similar optimism encompass Ken Griffin's Citadel Investment Group, Roger Ibbotson's Zebra Capital Management and . In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to CASI Pharmaceuticals Inc (NASDAQ:CASI), around 0.17% of its 13F portfolio. Ikarian Capital is also relatively very bullish on the stock, setting aside 0.16 percent of its 13F equity portfolio to CASI.

As aggregate interest increased, specific money managers have jumped into CASI Pharmaceuticals Inc (NASDAQ:CASI) headfirst. Ikarian Capital, managed by Neil Shahrestani, assembled the largest position in CASI Pharmaceuticals Inc (NASDAQ:CASI). Ikarian Capital had $2.1 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 CASI Pharmaceuticals Inc (NASDAQ:CASI) but similarly valued. We will take a look at LF Capital Acquistion Corp. (NASDAQ:LFAC), National Bankshares Inc. (NASDAQ:NKSH), Target Hospitality Corp. (NASDAQ:TH), and Protective Insurance Corporation (NASDAQ:PTVCA). This group of stocks' market caps are similar to CASI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LFAC,8,30428,-1 NKSH,2,16023,0 TH,15,13371,-4 PTVCA,2,1791,1 Average,6.75,15403,-1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $3 million in CASI's case. Target Hospitality Corp. (NASDAQ:TH) is the most popular stock in this table. On the other hand National Bankshares Inc. (NASDAQ:NKSH) is the least popular one with only 2 bullish hedge fund positions. CASI Pharmaceuticals Inc (NASDAQ:CASI) is not the least popular stock in this group but hedge fund interest is still below average. 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 CASI as the stock returned 29.4% during 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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