Insider Monkey has processed numerous 13F filings of hedge funds and successful investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find write-ups about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Sientra Inc (NASDAQ:SIEN) based on that data.
Hedge fund interest in Sientra Inc (NASDAQ:SIEN) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare SIEN to other stocks including Tocagen Inc. (NASDAQ:TOCA), Celyad SA (EBR:CYAD), and Purple Innovation, Inc. (NASDAQ:PRPL) to get a better sense of its popularity.
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' 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 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. 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 gander at the key hedge fund action surrounding Sientra Inc (NASDAQ:SIEN).
What have hedge funds been doing with Sientra Inc (NASDAQ:SIEN)?
At Q1's end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 13 hedge funds held shares or bullish call options in SIEN a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Sientra Inc (NASDAQ:SIEN) was held by Deerfield Management, which reported holding $23.4 million worth of stock at the end of March. It was followed by Millennium Management with a $13.7 million position. Other investors bullish on the company included Granite Point Capital, Pura Vida Investments, and Two Sigma Advisors.
Since Sientra Inc (NASDAQ:SIEN) has experienced falling interest from the entirety of the hedge funds we track, it's easy to see that there were a few funds that slashed their positions entirely in the third quarter. Interestingly, Brian Ashford-Russell and Tim Woolley's Polar Capital cut the largest stake of all the hedgies monitored by Insider Monkey, worth close to $11.5 million in stock, and Richard Driehaus's Driehaus Capital was right behind this move, as the fund dumped about $10.2 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Sientra Inc (NASDAQ:SIEN) but similarly valued. We will take a look at Tocagen Inc. (NASDAQ:TOCA), Celyad SA (NASDAQ:CYAD), Purple Innovation, Inc. (NASDAQ:PRPL), and Cerecor Inc. (NASDAQ:CERC). This group of stocks' market values resemble SIEN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TOCA,8,13818,-1 CYAD,1,554,0 PRPL,4,29487,1 CERC,6,122126,1 Average,4.75,41496,0.25 [/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 $41 million. That figure was $52 million in SIEN's case. Tocagen Inc. (NASDAQ:TOCA) is the most popular stock in this table. On the other hand Celyad SA (NASDAQ:CYAD) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Sientra Inc (NASDAQ:SIEN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately SIEN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on SIEN were disappointed as the stock returned -20.3% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.