Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter of 2018. Trends reversed 180 degrees in 2019 amid Powell's pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the third quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Vaxart, Inc. (NASDAQ:VXRT).
Vaxart, Inc. (NASDAQ:VXRT) has seen an increase in hedge fund interest recently. VXRT was in 4 hedge funds' portfolios at the end of September. There were 2 hedge funds in our database with VXRT holdings at the end of the previous quarter. Our calculations also showed that VXRT 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.
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' 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_26073" align="alignnone" width="600"] Jim Simons of Renaissance Technologies[/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 as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Now let's take a peek at the latest hedge fund action surrounding Vaxart, Inc. (NASDAQ:VXRT).
What have hedge funds been doing with Vaxart, Inc. (NASDAQ:VXRT)?
At Q3's end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in VXRT 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.
When looking at the institutional investors followed by Insider Monkey, Armistice Capital, managed by Steven Boyd, holds the biggest position in Vaxart, Inc. (NASDAQ:VXRT). Armistice Capital has a $8.6 million position in the stock, comprising 0.6% of its 13F portfolio. Coming in second is Sabby Capital, led by Hal Mintz, holding a $0.4 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions contain Renaissance Technologies, Ken Griffin's Citadel Investment Group and . In terms of the portfolio weights assigned to each position Armistice Capital allocated the biggest weight to Vaxart, Inc. (NASDAQ:VXRT), around 0.57% of its 13F portfolio. Sabby Capital is also relatively very bullish on the stock, setting aside 0.23 percent of its 13F equity portfolio to VXRT.
As industrywide interest jumped, key hedge funds have jumped into Vaxart, Inc. (NASDAQ:VXRT) headfirst. Armistice Capital, managed by Steven Boyd, assembled the most valuable position in Vaxart, Inc. (NASDAQ:VXRT). Armistice Capital had $8.6 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0 million investment in the stock during the quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Vaxart, Inc. (NASDAQ:VXRT) but similarly valued. We will take a look at Dare Bioscience, Inc. (NASDAQ:DARE), iBio, Inc. (NYSE:IBIO), Inuvo, Inc. (NYSE:INUV), and Electro-Sensors, Inc. (NASDAQ:ELSE). This group of stocks' market values are closest to VXRT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DARE,1,166,0 IBIO,1,22,0 INUV,1,484,-1 ELSE,1,388,-1 Average,1,265,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 1 hedge funds with bullish positions and the average amount invested in these stocks was $0 million. That figure was $9 million in VXRT's case. Dare Bioscience, Inc. (NASDAQ:DARE) is the most popular stock in this table. On the other hand Dare Bioscience, Inc. (NASDAQ:DARE) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Vaxart, Inc. (NASDAQ:VXRT) 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 VXRT wasn't nearly as popular as these 20 stocks and hedge funds that were betting on VXRT were disappointed as the stock returned -8.3% 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.