The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtDBV Technologies SA (NASDAQ:DBVT) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Is DBV Technologies SA (NASDAQ:DBVT) a first-rate investment now? Prominent investors were getting less optimistic. The number of bullish hedge fund bets retreated by 3 recently. Our calculations also showed that DBVT 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). DBVT was in 10 hedge funds' portfolios at the end of March. There were 13 hedge funds in our database with DBVT positions at the end of the previous quarter. 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 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 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_844243" align="aligncenter" width="400"] Donald Sussman of Paloma Partners[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's analyze the latest hedge fund action regarding DBV Technologies SA (NASDAQ:DBVT).
What have hedge funds been doing with DBV Technologies SA (NASDAQ:DBVT)?
At the end of the first quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -23% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in DBVT a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Baker Bros. Advisors held the most valuable stake in DBV Technologies SA (NASDAQ:DBVT), which was worth $57.3 million at the end of the third quarter. On the second spot was Perceptive Advisors which amassed $28.7 million worth of shares. Deerfield Management, Citadel Investment Group, and Millennium 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 Perceptive Advisors allocated the biggest weight to DBV Technologies SA (NASDAQ:DBVT), around 0.75% of its 13F portfolio. Deerfield Management is also relatively very bullish on the stock, earmarking 0.65 percent of its 13F equity portfolio to DBVT.
Due to the fact that DBV Technologies SA (NASDAQ:DBVT) has witnessed falling interest from the aggregate hedge fund industry, we can see that there was a specific group of hedge funds that decided to sell off their positions entirely by the end of the first quarter. It's worth mentioning that Ken Greenberg and David Kim's Ghost Tree Capital sold off the biggest position of the 750 funds tracked by Insider Monkey, worth about $8 million in stock, and Dmitry Balyasny's Balyasny Asset Management was right behind this move, as the fund cut about $3.9 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 3 funds by the end of the first quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as DBV Technologies SA (NASDAQ:DBVT) but similarly valued. We will take a look at World Acceptance Corp. (NASDAQ:WRLD), Horizon Bancorp (NASDAQ:HBNC), Viad Corp (NYSE:VVI), and Ribbon Communications Inc. (NASDAQ:RBBN). This group of stocks' market values are similar to DBVT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WRLD,13,101286,-1 HBNC,11,19457,1 VVI,14,66670,0 RBBN,11,19349,2 Average,12.25,51691,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $115 million in DBVT's case. Viad Corp (NYSE:VVI) is the most popular stock in this table. On the other hand Horizon Bancorp (NASDAQ:HBNC) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks DBV Technologies SA (NASDAQ:DBVT) is even less popular than HBNC. Hedge funds dodged a bullet by taking a bearish stance towards DBVT. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but managed to beat the market by 15.5 percentage points. Unfortunately DBVT wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); DBVT investors were disappointed as the stock returned 12% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.