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In this article you are going to find out whether hedge funds think AVROBIO, Inc. (NASDAQ:AVRO) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
AVROBIO, Inc. (NASDAQ:AVRO) investors should pay attention to an increase in enthusiasm from smart money lately. AVRO was in 17 hedge funds' portfolios at the end of March. There were 14 hedge funds in our database with AVRO holdings at the end of the previous quarter. Our calculations also showed that AVRO 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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Brad Farber of Atika Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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. With all of this in mind let's analyze the fresh hedge fund action regarding AVROBIO, Inc. (NASDAQ:AVRO).
How have hedgies been trading AVROBIO, Inc. (NASDAQ:AVRO)?
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from one quarter earlier. By comparison, 4 hedge funds held shares or bullish call options in AVRO a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Citadel Investment Group was the largest shareholder of AVROBIO, Inc. (NASDAQ:AVRO), with a stake worth $30.4 million reported as of the end of September. Trailing Citadel Investment Group was Farallon Capital, which amassed a stake valued at $26.8 million. Camber Capital Management, Deerfield Management, and Tang Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Burrage Capital Management allocated the biggest weight to AVROBIO, Inc. (NASDAQ:AVRO), around 3.22% of its 13F portfolio. Tang Capital Management is also relatively very bullish on the stock, setting aside 2.18 percent of its 13F equity portfolio to AVRO.
Now, key money managers have jumped into AVROBIO, Inc. (NASDAQ:AVRO) headfirst. Holocene Advisors, managed by Brandon Haley, established the biggest position in AVROBIO, Inc. (NASDAQ:AVRO). Holocene Advisors had $7.6 million invested in the company at the end of the quarter. Richard Driehaus's Driehaus Capital also made a $3.8 million investment in the stock during the quarter. The following funds were also among the new AVRO investors: Christiana Goh Bardon's Burrage Capital Management, Simon Sadler's Segantii Capital, and Brad Farber's Atika Capital.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as AVROBIO, Inc. (NASDAQ:AVRO) but similarly valued. We will take a look at Big Lots, Inc. (NYSE:BIG), Portola Pharmaceuticals Inc (NASDAQ:PTLA), Compugen Ltd. (NASDAQ:CGEN), and Groupon Inc (NASDAQ:GRPN). All of these stocks' market caps are closest to AVRO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BIG,15,75414,-9 PTLA,17,61104,-10 CGEN,8,44171,2 GRPN,18,74380,-8 Average,14.5,63767,-6.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $168 million in AVRO's case. Groupon Inc (NASDAQ:GRPN) is the most popular stock in this table. On the other hand Compugen Ltd. (NASDAQ:CGEN) is the least popular one with only 8 bullish hedge fund positions. AVROBIO, Inc. (NASDAQ:AVRO) is not the most popular stock in this group but hedge fund interest is still above 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 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on AVRO as the stock returned 41.8% in Q2 (through June 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.