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At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Infinity Pharmaceuticals Inc. (NASDAQ:INFI).
Is Infinity Pharmaceuticals Inc. (NASDAQ:INFI) a bargain? Investors who are in the know were buying. The number of bullish hedge fund positions improved by 1 in recent months. Infinity Pharmaceuticals Inc. (NASDAQ:INFI) was in 6 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 20. Our calculations also showed that INFI isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
To the average investor there are many signals investors can use to assess stocks. A pair of the less utilized signals are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the elite investment managers can outpace the market by a significant margin (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we're going to analyze the latest hedge fund action encompassing Infinity Pharmaceuticals Inc. (NASDAQ:INFI).
Kerr Neilson of Platinum Asset Management
What does smart money think about Infinity Pharmaceuticals Inc. (NASDAQ:INFI)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from one quarter earlier. On the other hand, there were a total of 6 hedge funds with a bullish position in INFI a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Mark Lampert's Biotechnology Value Fund / BVF Inc has the number one position in Infinity Pharmaceuticals Inc. (NASDAQ:INFI), worth close to $20.4 million, accounting for 1.1% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, with a $2.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism comprise Kerr Neilson's Platinum Asset Management, Julian Baker and Felix Baker's Baker Bros. Advisors and James A. Silverman's Opaleye Management. In terms of the portfolio weights assigned to each position Biotechnology Value Fund / BVF Inc allocated the biggest weight to Infinity Pharmaceuticals Inc. (NASDAQ:INFI), around 1.11% of its 13F portfolio. Opaleye Management is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to INFI.
As aggregate interest increased, some big names were leading the bulls' herd. Opaleye Management, managed by James A. Silverman, established the most valuable position in Infinity Pharmaceuticals Inc. (NASDAQ:INFI). Opaleye Management had $0.1 million invested in the company at the end of the quarter.
Let's now take a look at hedge fund activity in other stocks similar to Infinity Pharmaceuticals Inc. (NASDAQ:INFI). We will take a look at Cinedigm Corp (NASDAQ:CIDM), Amtech Systems, Inc. (NASDAQ:ASYS), Twin Disc, Incorporated (NASDAQ:TWIN), First National Corporation (NASDAQ:FXNC), Inspired Entertainment, Inc. (NASDAQ:INSE), TRACON Pharmaceuticals Inc (NASDAQ:TCON), and Randolph Bancorp, Inc. (NASDAQ:RNDB). This group of stocks' market valuations match INFI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CIDM,3,2826,-1 ASYS,7,11347,-1 TWIN,4,14625,-4 FXNC,2,6506,0 INSE,5,14453,-2 TCON,5,22756,0 RNDB,2,613,0 Average,4,10447,-1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $24 million in INFI's case. Amtech Systems, Inc. (NASDAQ:ASYS) is the most popular stock in this table. On the other hand First National Corporation (NASDAQ:FXNC) is the least popular one with only 2 bullish hedge fund positions. Infinity Pharmaceuticals Inc. (NASDAQ:INFI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for INFI is 55. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on INFI as the stock returned 70.9% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
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