The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider PhaseBio Pharmaceuticals, Inc. (NASDAQ:PHAS) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is PhaseBio Pharmaceuticals, Inc. (NASDAQ:PHAS) the right investment to pursue these days? The best stock pickers are in a bullish mood. The number of long hedge fund bets increased by 2 in recent months. Our calculations also showed that PHAS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_364887" align="aligncenter" width="806"] Kris Jenner of Rock Springs Capital 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 new hedge fund action encompassing PhaseBio Pharmaceuticals, Inc. (NASDAQ:PHAS).
Hedge fund activity in PhaseBio Pharmaceuticals, Inc. (NASDAQ:PHAS)
At Q3's end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in PHAS a year ago. So, let's examine 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, Kris Jenner, Gordon Bussard, Graham McPhail's Rock Springs Capital Management has the biggest position in PhaseBio Pharmaceuticals, Inc. (NASDAQ:PHAS), worth close to $5.9 million, amounting to 0.2% of its total 13F portfolio. The second largest stake is held by Cormorant Asset Management, managed by Bihua Chen, which holds a $3.4 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish encompass Farallon Capital, Nathan Fischel's DAFNA Capital Management and Jerome Pfund and Michael Sjostrom's Sectoral Asset Management. In terms of the portfolio weights assigned to each position DAFNA Capital Management allocated the biggest weight to PhaseBio Pharmaceuticals, Inc. (NASDAQ:PHAS), around 0.57% of its 13F portfolio. Sabby Capital is also relatively very bullish on the stock, setting aside 0.28 percent of its 13F equity portfolio to PHAS.
Now, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, created the most valuable position in PhaseBio Pharmaceuticals, Inc. (NASDAQ:PHAS). Millennium Management had $0.3 million invested in the company at the end of the quarter. Renaissance Technologies also made a $0.2 million investment in the stock during the quarter. The other funds with brand new PHAS positions are David Harding's Winton Capital Management and Mike Vranos's Ellington.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as PhaseBio Pharmaceuticals, Inc. (NASDAQ:PHAS) but similarly valued. We will take a look at Rhinebeck Bancorp, Inc. (NASDAQ:RBKB), Tanzanian Gold Corporation (NYSEAMERICAN:TRX), Auryn Resources Inc. (NYSEAMERICAN:AUG), and Sesen Bio, Inc. (NASDAQ:SESN). All of these stocks' market caps match PHAS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RBKB,2,7573,0 TRX,1,17,-1 AUG,3,596,1 SESN,3,7262,-2 Average,2.25,3862,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.25 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $16 million in PHAS's case. Auryn Resources Inc. (NYSEAMERICAN:AUG) is the most popular stock in this table. On the other hand Tanzanian Gold Corporation Corp. (US) (NYSEAMERICAN:TRX) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks PhaseBio Pharmaceuticals, Inc. (NASDAQ:PHAS) 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. Unfortunately PHAS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on PHAS were disappointed as the stock returned -21.8% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.