We at Insider Monkey have gone over 730 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of June 28th. In this article, we look at what those funds think of Aimmune Therapeutics Inc (NASDAQ:AIMT) based on that data.
Is Aimmune Therapeutics Inc (NASDAQ:AIMT) a buy, sell, or hold? The smart money is taking a pessimistic view. The number of long hedge fund bets shrunk by 2 recently. Our calculations also showed that AIMT isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to 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 market by 40 percentage points since May 2014 through May 30, 2019 (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.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to view the latest hedge fund action encompassing Aimmune Therapeutics Inc (NASDAQ:AIMT).
What does smart money think about Aimmune Therapeutics Inc (NASDAQ:AIMT)?
At Q2's end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. By comparison, 19 hedge funds held shares or bullish call options in AIMT a year ago. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Palo Alto Investors was the largest shareholder of Aimmune Therapeutics Inc (NASDAQ:AIMT), with a stake worth $79.7 million reported as of the end of March. Trailing Palo Alto Investors was Aisling Capital, which amassed a stake valued at $41.4 million. Baker Bros. Advisors, Foresite Capital, and Point72 Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that Aimmune Therapeutics Inc (NASDAQ:AIMT) has witnessed declining sentiment from the smart money, it's safe to say that there was a specific group of hedge funds who were dropping their positions entirely in the second quarter. It's worth mentioning that John Smith Clark's Southpoint Capital Advisors sold off the biggest stake of the 750 funds followed by Insider Monkey, comprising close to $17.9 million in stock, and Phill Gross and Robert Atchinson's Adage Capital Management was right behind this move, as the fund dumped about $8.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds in the second quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Aimmune Therapeutics Inc (NASDAQ:AIMT) but similarly valued. These stocks are US Ecology Inc. (NASDAQ:ECOL), Raven Industries, Inc. (NASDAQ:RAVN), NextGen Healthcare, Inc. (NASDAQ:NXGN), and Seacoast Banking Corporation of Florida (NASDAQ:SBCF). This group of stocks' market values are similar to AIMT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ECOL,5,6575,-4 RAVN,12,106797,1 NXGN,14,46230,1 SBCF,6,42244,-2 Average,9.25,50462,-1 [/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 $50 million. That figure was $182 million in AIMT's case. NextGen Healthcare, Inc. (NASDAQ:NXGN) is the most popular stock in this table. On the other hand US Ecology Inc. (NASDAQ:ECOL) is the least popular one with only 5 bullish hedge fund positions. Aimmune Therapeutics Inc (NASDAQ:AIMT) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately AIMT wasn't nearly as popular as these 20 stocks and hedge funds that were betting on AIMT were disappointed as the stock returned 0.6% 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.