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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 at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Unity Biotechnology, Inc. (NASDAQ:UBX).
Unity Biotechnology, Inc. (NASDAQ:UBX) was in 5 hedge funds' portfolios at the end of March. UBX investors should pay attention to a decrease in support from the world's most elite money managers recently. There were 7 hedge funds in our database with UBX positions at the end of the previous quarter. Our calculations also showed that UBX 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.
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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 51 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Israel Englander of Millennium Management[/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. Now let's view the fresh hedge fund action encompassing Unity Biotechnology, Inc. (NASDAQ:UBX).
How are hedge funds trading Unity Biotechnology, Inc. (NASDAQ:UBX)?
At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards UBX over the last 18 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
The largest stake in Unity Biotechnology, Inc. (NASDAQ:UBX) was held by Citadel Investment Group, which reported holding $1.1 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $0.8 million position. Other investors bullish on the company included Millennium Management, PDT Partners, and Marshall Wace LLP. In terms of the portfolio weights assigned to each position PDT Partners allocated the biggest weight to Unity Biotechnology, Inc. (NASDAQ:UBX), around 0.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.0008 percent of its 13F equity portfolio to UBX.
Judging by the fact that Unity Biotechnology, Inc. (NASDAQ:UBX) has faced falling interest from hedge fund managers, it's safe to say that there lies a certain "tier" of fund managers who were dropping their entire stakes last quarter. It's worth mentioning that D. E. Shaw's D E Shaw dumped the biggest investment of all the hedgies monitored by Insider Monkey, comprising an estimated $0.3 million in stock, and David Nguyen and Nancy Oh's One68 Global Capital was right behind this move, as the fund dropped about $0.1 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 2 funds last quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Unity Biotechnology, Inc. (NASDAQ:UBX) but similarly valued. These stocks are Rimini Street, Inc. (NASDAQ:RMNI), Newtek Business Services, Inc (NASDAQ:NEWT), Citizens & Northern Corporation (NASDAQ:CZNC), and Marine Products Corp. (NYSE:MPX). This group of stocks' market values are similar to UBX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RMNI,7,132213,-2 NEWT,8,7880,1 CZNC,2,4939,0 MPX,6,8879,1 Average,5.75,38478,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $2 million in UBX's case. Newtek Business Services, Inc (NASDAQ:NEWT) is the most popular stock in this table. On the other hand Citizens & Northern Corporation (NASDAQ:CZNC) is the least popular one with only 2 bullish hedge fund positions. Unity Biotechnology, Inc. (NASDAQ:UBX) 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 UBX as the stock returned 41% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.