In this article we will check out the progression of hedge fund sentiment towards Fortress Biotech Inc (NASDAQ:FBIO) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Fortress Biotech Inc (NASDAQ:FBIO) a buy here? Prominent investors are taking a bearish view. The number of long hedge fund positions retreated by 3 lately. Our calculations also showed that FBIO 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). FBIO was in 5 hedge funds' portfolios at the end of March. There were 8 hedge funds in our database with FBIO positions at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are plenty of methods investors use to assess stocks. Two of the most under-the-radar methods are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the best investment managers can outperform their index-focused peers by a superb amount (see the details here).
[caption id="attachment_140292" align="aligncenter" width="400"] Israel Englander of Millennium Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. 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. Keeping this in mind we're going to go over the fresh hedge fund action regarding Fortress Biotech Inc (NASDAQ:FBIO).
What does smart money think about Fortress Biotech Inc (NASDAQ:FBIO)?
At Q1's end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -38% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards FBIO over the last 18 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, Nantahala Capital Management was the largest shareholder of Fortress Biotech Inc (NASDAQ:FBIO), with a stake worth $3.5 million reported as of the end of September. Trailing Nantahala Capital Management was Renaissance Technologies, which amassed a stake valued at $0.9 million. Millennium Management, 683 Capital Partners, and ExodusPoint Capital 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 Nantahala Capital Management allocated the biggest weight to Fortress Biotech Inc (NASDAQ:FBIO), around 0.13% of its 13F portfolio. 683 Capital Partners is also relatively very bullish on the stock, dishing out 0.04 percent of its 13F equity portfolio to FBIO.
Since Fortress Biotech Inc (NASDAQ:FBIO) has faced declining sentiment from the smart money, we can see that there is a sect of money managers that elected to cut their positions entirely in the first quarter. It's worth mentioning that James A. Silverman's Opaleye Management said goodbye to the largest position of the 750 funds followed by Insider Monkey, comprising about $9.8 million in stock. David Nguyen and Nancy Oh's fund, One68 Global Capital, also dumped its stock, about $0.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 3 funds in the first quarter.
Let's also examine hedge fund activity in other stocks similar to Fortress Biotech Inc (NASDAQ:FBIO). These stocks are American Realty Investors, Inc. (NYSE:ARL), Lifevantage Corporation (NASDAQ:LFVN), Trecora Resources (NYSE:TREC), and G. Willi-Food International Limited (NASDAQ:WILC). This group of stocks' market valuations match FBIO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ARL,1,303,0 LFVN,8,14970,0 TREC,8,14950,0 WILC,2,16321,-1 Average,4.75,11636,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $6 million in FBIO's case. Lifevantage Corporation (NASDAQ:LFVN) is the most popular stock in this table. On the other hand American Realty Investors, Inc. (NYSE:ARL) is the least popular one with only 1 bullish hedge fund positions. Fortress Biotech Inc (NASDAQ:FBIO) 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on FBIO as the stock returned 53.4% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.