We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards ADMA Biologics Inc (NASDAQ:ADMA) and determine whether hedge funds skillfully traded this stock.
ADMA Biologics Inc (NASDAQ:ADMA) investors should be aware of an increase in hedge fund sentiment of late. ADMA Biologics Inc (NASDAQ:ADMA) was in 21 hedge funds' portfolios at the end of June. The all time high for this statistics is 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 19 hedge funds in our database with ADMA positions at the end of the first quarter. Our calculations also showed that ADMA isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
Today there are dozens of formulas stock market investors have at their disposal to evaluate stocks. Some of the less known formulas are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can trounce their index-focused peers by a solid amount (see the details here).
Sander Gerber of Hudson Bay Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. We are also checking out this lithium company which could benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Keeping this in mind we're going to analyze the fresh hedge fund action regarding ADMA Biologics Inc (NASDAQ:ADMA).
How are hedge funds trading ADMA Biologics Inc (NASDAQ:ADMA)?
At second quarter's end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in ADMA a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Perceptive Advisors was the largest shareholder of ADMA Biologics Inc (NASDAQ:ADMA), with a stake worth $48.6 million reported as of the end of September. Trailing Perceptive Advisors was Consonance Capital Management, which amassed a stake valued at $7.8 million. 683 Capital Partners, Sphera Global Healthcare Fund, and Prosight Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Prosight Capital allocated the biggest weight to ADMA Biologics Inc (NASDAQ:ADMA), around 1.63% of its 13F portfolio. Perceptive Advisors is also relatively very bullish on the stock, dishing out 0.79 percent of its 13F equity portfolio to ADMA.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls' herd. Alyeska Investment Group, managed by Anand Parekh, initiated the biggest position in ADMA Biologics Inc (NASDAQ:ADMA). Alyeska Investment Group had $0.9 million invested in the company at the end of the quarter. Sander Gerber's Hudson Bay Capital Management also made a $0.7 million investment in the stock during the quarter. The other funds with brand new ADMA positions are Donald Sussman's Paloma Partners and Cliff Asness's AQR Capital Management.
Let's check out hedge fund activity in other stocks similar to ADMA Biologics Inc (NASDAQ:ADMA). These stocks are Liminal BioSciences Inc. (NASDAQ:LMNL), CASI Pharmaceuticals Inc (NASDAQ:CASI), Landmark Infrastructure Partners LP (NASDAQ:LMRK), Ciner Resources LP (NYSE:CINR), Tecnoglass Inc. (NASDAQ:TGLS), Ruhnn Holding Limited (NASDAQ:RUHN), and Movado Group, Inc (NYSE:MOV). This group of stocks' market caps resemble ADMA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LMNL,2,35544,1 CASI,6,3154,2 LMRK,1,680,0 CINR,1,2295,0 TGLS,4,6891,-1 RUHN,2,687,0 MOV,18,15568,5 Average,4.9,9260,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.9 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $84 million in ADMA's case. Movado Group, Inc (NYSE:MOV) is the most popular stock in this table. On the other hand Landmark Infrastructure Partners LP (NASDAQ:LMRK) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks ADMA Biologics Inc (NASDAQ:ADMA) is more popular among hedge funds. Our overall hedge fund sentiment score for ADMA is 87. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. Unfortunately ADMA wasn't nearly as popular as these 10 stocks and hedge funds that were betting on ADMA were disappointed as the stock returned -18.4% during the third 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.