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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards ESSA Pharma Inc. (NASDAQ:EPIX).
ESSA Pharma Inc. (NASDAQ:EPIX) was in 4 hedge funds' portfolios at the end of March. EPIX has experienced a decrease in hedge fund interest of late. There were 5 hedge funds in our database with EPIX holdings at the end of the previous quarter. Our calculations also showed that EPIX 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.
[caption id="attachment_261250" align="aligncenter" width="400"] Peter Kolchinsky of RA Capital 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 we're going to view the fresh hedge fund action surrounding ESSA Pharma Inc. (NASDAQ:EPIX).
How have hedgies been trading ESSA Pharma Inc. (NASDAQ:EPIX)?
At Q1's end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards EPIX over the last 18 quarters. With hedge funds' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Biotechnology Value Fund / BVF Inc, managed by Mark Lampert, holds the most valuable position in ESSA Pharma Inc. (NASDAQ:EPIX). Biotechnology Value Fund / BVF Inc has a $9.7 million position in the stock, comprising 0.9% of its 13F portfolio. On Biotechnology Value Fund / BVF Inc's heels is Guy Levy of Soleus Capital, with a $8.3 million position; the fund has 9.7% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Samuel Isaly's OrbiMed Advisors, Peter Kolchinsky's RA Capital Management and . In terms of the portfolio weights assigned to each position Soleus Capital allocated the biggest weight to ESSA Pharma Inc. (NASDAQ:EPIX), around 9.68% of its 13F portfolio. Biotechnology Value Fund / BVF Inc is also relatively very bullish on the stock, dishing out 0.9 percent of its 13F equity portfolio to EPIX.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Renaissance Technologies. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified EPIX as a viable investment and initiated a position in the stock.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as ESSA Pharma Inc. (NASDAQ:EPIX) but similarly valued. These stocks are Checkpoint Therapeutics, Inc. (NASDAQ:CKPT), Atento SA (NYSE:ATTO), Vermillion, Inc. (NASDAQ:VRML), and Moneygram International Inc (NYSE:MGI). This group of stocks' market values resemble EPIX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CKPT,3,157,1 ATTO,6,509,0 VRML,4,2826,0 MGI,8,3009,-6 Average,5.25,1625,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $28 million in EPIX's case. Moneygram International Inc (NYSE:MGI) is the most popular stock in this table. On the other hand Checkpoint Therapeutics, Inc. (NASDAQ:CKPT) is the least popular one with only 3 bullish hedge fund positions. ESSA Pharma Inc. (NASDAQ:EPIX) 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 EPIX as the stock returned 30% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.