It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 18.7% so far in 2019 and outperformed the S&P 500 ETF by 6.6 percentage points. We are done processing the latest 13f filings and in this article we will study how hedge fund sentiment towards Abeona Therapeutics Inc (NASDAQ:ABEO) changed during the first quarter.
Abeona Therapeutics Inc (NASDAQ:ABEO) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 15 hedge funds' portfolios at the end of March. At the end of this article we will also compare ABEO to other stocks including Miller Industries, Inc. (NYSE:MLR), Franklin Covey Co. (NYSE:FC), and Permian Basin Royalty Trust (NYSE:PBT) to get a better sense of its popularity.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We're going to view the latest hedge fund action regarding Abeona Therapeutics Inc (NASDAQ:ABEO).
What have hedge funds been doing with Abeona Therapeutics Inc (NASDAQ:ABEO)?
Heading into the second quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in ABEO over the last 15 quarters. With the smart money's capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Among these funds, Adage Capital Management held the most valuable stake in Abeona Therapeutics Inc (NASDAQ:ABEO), which was worth $19.1 million at the end of the first quarter. On the second spot was Knoll Capital Management which amassed $17.4 million worth of shares. Moreover, Baker Bros. Advisors, Millennium Management, and Opaleye Management were also bullish on Abeona Therapeutics Inc (NASDAQ:ABEO), allocating a large percentage of their portfolios to this stock.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Viking Global. 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 only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Tudor Investment Corp).
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Abeona Therapeutics Inc (NASDAQ:ABEO) but similarly valued. We will take a look at Miller Industries, Inc. (NYSE:MLR), Franklin Covey Co. (NYSE:FC), Permian Basin Royalty Trust (NYSE:PBT), and Digi International Inc. (NASDAQ:DGII). This group of stocks' market values are closest to ABEO's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MLR,8,51292,0 FC,7,18239,-1 PBT,6,11506,0 DGII,15,42028,4 Average,9,30766,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $31 million. That figure was $69 million in ABEO's case. Digi International Inc. (NASDAQ:DGII) is the most popular stock in this table. On the other hand Permian Basin Royalty Trust (NYSE:PBT) is the least popular one with only 6 bullish hedge fund positions. Abeona Therapeutics Inc (NASDAQ:ABEO) 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 ABEO wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ABEO were disappointed as the stock returned -33.6% 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.