Concerns over rising interest rates and expected further rate increases have hit several stocks hard since the end of the third quarter. NASDAQ and Russell 2000 indices are already in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by about 4 percentage points in the first half of the fourth quarter. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Assembly Biosciences Inc (NASDAQ:ASMB).
Assembly Biosciences Inc (NASDAQ:ASMB) investors should be aware of an increase in enthusiasm from smart money lately. ASMB was in 20 hedge funds' portfolios at the end of September. There were 19 hedge funds in our database with ASMB positions at the end of the previous quarter. Our calculations also showed that ASMB isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a peek at the new hedge fund action regarding Assembly Biosciences Inc (NASDAQ:ASMB).
Hedge fund activity in Assembly Biosciences Inc (NASDAQ:ASMB)
At Q3's end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the second quarter of 2018. On the other hand, there were a total of 17 hedge funds with a bullish position in ASMB at the beginning of this year. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
More specifically, EcoR1 Capital was the largest shareholder of Assembly Biosciences Inc (NASDAQ:ASMB), with a stake worth $109.3 million reported as of the end of September. Trailing EcoR1 Capital was OrbiMed Advisors, which amassed a stake valued at $45.8 million. venBio Select Advisor, Rock Springs Capital Management, and Ghost Tree Capital were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, specific money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the biggest position in Assembly Biosciences Inc (NASDAQ:ASMB). Marshall Wace LLP had $11.2 million invested in the company at the end of the quarter. Thomas Steyer's Farallon Capital also initiated a $11.1 million position during the quarter. The following funds were also among the new ASMB investors: Anand Parekh's Alyeska Investment Group, David Costen Haley's HBK Investments, and Steve Cohen's Point72 Asset Management.
Let's also examine hedge fund activity in other stocks similar to Assembly Biosciences Inc (NASDAQ:ASMB). We will take a look at OraSure Technologies, Inc. (NASDAQ:OSUR), Falcon Minerals Corporation (NASDAQ:FLMN), Rayonier Advanced Materials Inc (NYSE:RYAM), and CIRCOR International, Inc. (NYSE:CIR). This group of stocks' market valuations resemble ASMB's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OSUR,21,151915,4 FLMN,17,264186,3 RYAM,23,177760,-2 CIR,5,208487,-3 Average,16.5,200587,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $201 million. That figure was $270 million in ASMB's case. Rayonier Advanced Materials Inc (NYSE:RYAM) is the most popular stock in this table. On the other hand CIRCOR International, Inc. (NYSE:CIR) is the least popular one with only 5 bullish hedge fund positions. Assembly Biosciences Inc (NASDAQ:ASMB) 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. In this regard RYAM might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.