The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Beyond Air, Inc. (NASDAQ:XAIR) based on those filings.
Is Beyond Air, Inc. (NASDAQ:XAIR) a buy right now? Prominent investors are becoming hopeful. The number of long hedge fund bets rose by 1 in recent months. Our calculations also showed that XAIR 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 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 51 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.
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Mark Kingdon of Kingdon Capital[/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 trades like this one. 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 let's take a gander at the new hedge fund action encompassing Beyond Air, Inc. (NASDAQ:XAIR).
How are hedge funds trading Beyond Air, Inc. (NASDAQ:XAIR)?
Heading into the second quarter of 2020, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in XAIR a year ago. So, let's find out 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, Kingdon Capital, managed by Mark Kingdon, holds the largest position in Beyond Air, Inc. (NASDAQ:XAIR). Kingdon Capital has a $4.1 million position in the stock, comprising 0.7% of its 13F portfolio. Coming in second is Millennium Management, managed by Israel Englander, which holds a $0.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions consist of Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, David M. Knott's Dorset Management and . In terms of the portfolio weights assigned to each position Kingdon Capital allocated the biggest weight to Beyond Air, Inc. (NASDAQ:XAIR), around 0.75% of its 13F portfolio. Dorset Management is also relatively very bullish on the stock, designating 0.03 percent of its 13F equity portfolio to XAIR.
Now, key money managers have jumped into Beyond Air, Inc. (NASDAQ:XAIR) headfirst. Dorset Management, managed by David M. Knott, created the largest position in Beyond Air, Inc. (NASDAQ:XAIR). Dorset Management had $0 million invested in the company at the end of the quarter.
Let's also examine hedge fund activity in other stocks similar to Beyond Air, Inc. (NASDAQ:XAIR). These stocks are Lifetime Brands Inc (NASDAQ:LCUT), Fennec Pharmaceuticals Inc. (NASDAQ:FENC), Biglari Holdings Inc (NYSE:BH), and Quantum Corporation (NASDAQ:QMCO). All of these stocks' market caps resemble XAIR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LCUT,2,1001,0 FENC,7,47183,-2 BH,10,17128,-1 QMCO,10,6267,10 Average,7.25,17895,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $4 million in XAIR's case. Biglari Holdings Inc (NYSE:BH) is the most popular stock in this table. On the other hand Lifetime Brands Inc (NASDAQ:LCUT) is the least popular one with only 2 bullish hedge fund positions. Beyond Air, Inc. (NASDAQ:XAIR) 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 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 and surpassed the market by 13.2 percentage points. Unfortunately XAIR wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); XAIR investors were disappointed as the stock returned -9% 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 in 2020.
Disclosure: None. This article was originally published at Insider Monkey.