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 AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO).
AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) has experienced a decrease in activity from the world's largest hedge funds recently. AVEO was in 4 hedge funds' portfolios at the end of March. There were 6 hedge funds in our database with AVEO holdings at the end of the previous quarter. Our calculations also showed that AVEO 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.
In the financial world there are a lot of tools market participants put to use to evaluate their holdings. Some of the less known tools are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce the broader indices by a solid amount (see the details here).
[caption id="attachment_365194" align="aligncenter" width="400"] David E. Shaw of D.E. Shaw[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's analyze the fresh hedge fund action regarding AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO).
What have hedge funds been doing with AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO)?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AVEO over the last 18 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.
According to Insider Monkey's hedge fund database, Sabby Capital, managed by Hal Mintz, holds the largest position in AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO). Sabby Capital has a $1.5 million call position in the stock, comprising 0.6% of its 13F portfolio. The second most bullish fund manager is Sabby Capital, led by Hal Mintz, holding a $0.4 million position; 0.2% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish encompass David Harding's Winton Capital Management, Paul Marshall and Ian Wace's Marshall Wace LLP and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Sabby Capital allocated the biggest weight to AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO), around 0.17% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to AVEO.
Due to the fact that AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) has witnessed a decline in interest from the aggregate hedge fund industry, we can see that there were a few money managers that slashed their entire stakes last quarter. Interestingly, Israel Englander's Millennium Management cut the largest stake of the 750 funds monitored by Insider Monkey, worth about $0.2 million in stock. D. E. Shaw's fund, D E Shaw, also said goodbye to its stock, about $0 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 2 funds last quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) but similarly valued. These stocks are J Alexander's Holdings Inc (NYSE:JAX), Lee Enterprises, Incorporated (NYSE:LEE), Summit Midstream Partners LP (NYSE:SMLP), and Four Seasons Education (Cayman) Inc. (NYSE:FEDU). This group of stocks' market valuations are similar to AVEO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JAX,9,9687,-1 LEE,13,10356,5 SMLP,1,17,-3 FEDU,4,1699,0 Average,6.75,5440,0.25 [/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 $5 million. That figure was $1 million in AVEO's case. Lee Enterprises, Incorporated (NYSE:LEE) is the most popular stock in this table. On the other hand Summit Midstream Partners LP (NYSE:SMLP) is the least popular one with only 1 bullish hedge fund positions. AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) 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 AVEO as the stock returned 125.4% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.