The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Sinovac Biotech Ltd. (NASDAQ:SVA).
Sinovac Biotech Ltd. (NASDAQ:SVA) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds' portfolios at the end of the third quarter of 2019. At the end of this article we will also compare SVA to other stocks including Stemline Therapeutics Inc (NASDAQ:STML), Aurora Mobile Limited (NASDAQ:JG), and Landmark Infrastructure Partners LP (NASDAQ:LMRK) 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' 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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_341400" align="aligncenter" width="600"] Samuel Isaly of OrbiMed Advisors[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a look at the key hedge fund action encompassing Sinovac Biotech Ltd. (NASDAQ:SVA).
What does smart money think about Sinovac Biotech Ltd. (NASDAQ:SVA)?
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 3 hedge funds held shares or bullish call options in SVA 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.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Vivo Capital, managed by Albert Cha and Frank Kung, holds the largest position in Sinovac Biotech Ltd. (NASDAQ:SVA). Vivo Capital has a $38.2 million position in the stock, comprising 4.3% of its 13F portfolio. On Vivo Capital's heels is OrbiMed Advisors, managed by Samuel Isaly, which holds a $16.6 million position; the fund has 0.3% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Vivo Capital allocated the biggest weight to Sinovac Biotech Ltd. (NASDAQ:SVA), around 4.34% of its portfolio. OrbiMed Advisors is also relatively very bullish on the stock, setting aside 0.32 percent of its 13F equity portfolio to SVA.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Sinovac Biotech Ltd. (NASDAQ:SVA) but similarly valued. We will take a look at Stemline Therapeutics Inc (NASDAQ:STML), Aurora Mobile Limited (NASDAQ:JG), Landmark Infrastructure Partners LP (NASDAQ:LMRK), and Milestone Pharmaceuticals Inc. (NASDAQ:MIST). This group of stocks' market caps are similar to SVA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position STML,18,161684,1 JG,1,77,0 LMRK,3,2471,-1 MIST,6,22541,-1 Average,7,46693,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $70 million in SVA's case. Stemline Therapeutics Inc (NASDAQ:STML) is the most popular stock in this table. On the other hand Aurora Mobile Limited (NASDAQ:JG) is the least popular one with only 1 bullish hedge fund positions. Sinovac Biotech Ltd. (NASDAQ:SVA) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately SVA wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SVA investors were disappointed as the stock returned 0% during the fourth quarter (through 11/22) 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.