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Hedge Funds Have Never Been This Bullish On Aptose Biosciences Inc (APTO)

Debasis Saha

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Aptose Biosciences Inc (NASDAQ:APTO).

Is Aptose Biosciences Inc (NASDAQ:APTO) undervalued? The smart money is taking an optimistic view. The number of long hedge fund positions improved by 1 recently. Our calculations also showed that APTO isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). APTO was in 7 hedge funds' portfolios at the end of September. There were 6 hedge funds in our database with APTO holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

Today there are many indicators shareholders can use to analyze their holdings. A couple of the less known indicators are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can outperform their index-focused peers by a significant margin (see the details here).

[caption id="attachment_25717" align="alignnone" width="548"] Steven Cohen of Point72 Asset Management[/caption]

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy  based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We're going to take a glance at the fresh hedge fund action regarding Aptose Biosciences Inc (NASDAQ:APTO).

What have hedge funds been doing with Aptose Biosciences Inc (NASDAQ:APTO)?

Heading into the fourth quarter of 2019, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards APTO over the last 17 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is APTO A Good Stock To Buy?

The largest stake in Aptose Biosciences Inc (NASDAQ:APTO) was held by Nantahala Capital Management, which reported holding $8.9 million worth of stock at the end of September. It was followed by Point72 Asset Management with a $4.6 million position. Other investors bullish on the company included GLG Partners, Opaleye Management, and P.A.W. Capital Partners. In terms of the portfolio weights assigned to each position P.A.W. Capital Partners allocated the biggest weight to Aptose Biosciences Inc (NASDAQ:APTO), around 1.3% of its 13F portfolio. Opaleye Management is also relatively very bullish on the stock, dishing out 0.54 percent of its 13F equity portfolio to APTO.

As one would reasonably expect, some big names were leading the bulls' herd. Opaleye Management, managed by James A. Silverman, initiated the biggest position in Aptose Biosciences Inc (NASDAQ:APTO). Opaleye Management had $1.5 million invested in the company at the end of the quarter. Peter A. Wright's P.A.W. Capital Partners also made a $1 million investment in the stock during the quarter. The only other fund with a brand new APTO position is Ken Griffin's Citadel Investment Group.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Aptose Biosciences Inc (NASDAQ:APTO) but similarly valued. These stocks are Limestone Bancorp, Inc. (NASDAQ:LMST), Alcentra Capital Corp. (NASDAQ:ABDC), Park City Group, Inc. (NYSE:PCYG), and Meridian Bank (NASDAQ:MRBK). This group of stocks' market caps are similar to APTO's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LMST,1,4646,0 ABDC,3,2517,0 PCYG,3,569,-1 MRBK,5,20857,0 Average,3,7147,-0.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $20 million in APTO's case. Meridian Bank (NASDAQ:MRBK) is the most popular stock in this table. On the other hand Limestone Bancorp, Inc. (NASDAQ:LMST) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Aptose Biosciences Inc (NASDAQ:APTO) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on APTO as the stock returned 29.7% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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