In this article we will check out the progression of hedge fund sentiment towards Aprea Therapeutics, Inc. (NASDAQ:APRE) 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.
Aprea Therapeutics, Inc. (NASDAQ:APRE) was in 6 hedge funds' portfolios at the end of the first quarter of 2020. APRE investors should be aware of an increase in enthusiasm from smart money recently. There were 5 hedge funds in our database with APRE positions at the end of the previous quarter. Our calculations also showed that APRE 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.
[caption id="attachment_364887" align="aligncenter" width="399"] Kris Jenner of Rock Springs Capital 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 Aprea Therapeutics, Inc. (NASDAQ:APRE).
What have hedge funds been doing with Aprea Therapeutics, Inc. (NASDAQ:APRE)?
At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in APRE over the last 18 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Redmile Group held the most valuable stake in Aprea Therapeutics, Inc. (NASDAQ:APRE), which was worth $78.9 million at the end of the third quarter. On the second spot was Sectoral Asset Management which amassed $51.1 million worth of shares. Rock Springs Capital Management, Citadel Investment Group, and Parkman Healthcare Partners 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 Sectoral Asset Management allocated the biggest weight to Aprea Therapeutics, Inc. (NASDAQ:APRE), around 9.81% of its 13F portfolio. Redmile Group is also relatively very bullish on the stock, dishing out 2.21 percent of its 13F equity portfolio to APRE.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Parkman Healthcare Partners, managed by Greg Martinez, assembled the most valuable position in Aprea Therapeutics, Inc. (NASDAQ:APRE). Parkman Healthcare Partners had $1 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also initiated a $0.2 million position during the quarter.
Let's go over hedge fund activity in other stocks similar to Aprea Therapeutics, Inc. (NASDAQ:APRE). These stocks are Applied Therapeutics, Inc. (NASDAQ:APLT), Transportadora de Gas del Sur SA (NYSE:TGS), Passage Bio, Inc. (NASDAQ:PASG), and Constellium SE (NYSE:CSTM). This group of stocks' market values match APRE's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position APLT,16,173748,9 TGS,6,11344,-4 PASG,17,290618,17 CSTM,34,141047,-16 Average,18.25,154189,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $154 million. That figure was $160 million in APRE's case. Constellium SE (NYSE:CSTM) is the most popular stock in this table. On the other hand Transportadora de Gas del Sur SA (NYSE:TGS) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Aprea Therapeutics, Inc. (NASDAQ:APRE) is even less popular than TGS. Hedge funds dodged a bullet by taking a bearish stance towards APRE. 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 13.9% in 2020 through June 10th but managed to beat the market by 14.2 percentage points. Unfortunately APRE wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); APRE investors were disappointed as the stock returned -11.6% during the second quarter (through June 10th) 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.
Disclosure: None. This article was originally published at Insider Monkey.