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There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don't cover. Because of Carl Icahn and other elite funds' exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Savara, Inc. (NASDAQ:SVRA).
Savara, Inc. (NASDAQ:SVRA) shareholders have witnessed an increase in hedge fund sentiment recently. SVRA was in 13 hedge funds' portfolios at the end of March. There were 12 hedge funds in our database with SVRA holdings at the end of the previous quarter. Our calculations also showed that svra isn't among the 30 most popular stocks among hedge funds.
To most investors, hedge funds are perceived as unimportant, old investment tools of the past. While there are more than 8000 funds in operation at present, Our experts hone in on the crème de la crème of this club, approximately 750 funds. These investment experts orchestrate bulk of the hedge fund industry's total capital, and by tailing their best stock picks, Insider Monkey has come up with various investment strategies that have historically outrun the broader indices. Insider Monkey's flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points annually since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
Let's view the key hedge fund action regarding Savara, Inc. (NASDAQ:SVRA).
How have hedgies been trading Savara, Inc. (NASDAQ:SVRA)?
Heading into the second quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SVRA over the last 15 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Among these funds, Consonance Capital Management held the most valuable stake in Savara, Inc. (NASDAQ:SVRA), which was worth $22.8 million at the end of the first quarter. On the second spot was Farallon Capital which amassed $17.9 million worth of shares. Moreover, Sectoral Asset Management, Mangrove Partners, and Great Point Partners were also bullish on Savara, Inc. (NASDAQ:SVRA), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, key money managers have jumped into Savara, Inc. (NASDAQ:SVRA) headfirst. DAFNA Capital Management, managed by Nathan Fischel, established the most valuable position in Savara, Inc. (NASDAQ:SVRA). DAFNA Capital Management had $0.8 million invested in the company at the end of the quarter. Jim Simons's Renaissance Technologies also initiated a $0.5 million position during the quarter.
Let's also examine hedge fund activity in other stocks similar to Savara, Inc. (NASDAQ:SVRA). These stocks are Immersion Corporation (NASDAQ:IMMR), Global Medical REIT Inc. (NYSE:GMRE), MutualFirst Financial, Inc. (NASDAQ:MFSF), and PDL Community Bancorp (NASDAQ:PDLB). This group of stocks' market valuations are closest to SVRA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IMMR,16,86536,3 GMRE,16,34770,7 MFSF,3,24850,0 PDLB,2,1874,0 Average,9.25,37008,2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $64 million in SVRA's case. Immersion Corporation (NASDAQ:IMMR) is the most popular stock in this table. On the other hand PDL Community Bancorp (NASDAQ:PDLB) is the least popular one with only 2 bullish hedge fund positions. Savara, Inc. (NASDAQ:SVRA) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately SVRA wasn't nearly as popular as these 20 stocks and hedge funds that were betting on SVRA were disappointed as the stock returned -63.2% during the same period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
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