The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider Kadmon Holdings, Inc. (NASDAQ:KDMN) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is KDMN a good stock to buy? Hedge fund interest in Kadmon Holdings, Inc. (NASDAQ:KDMN) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that KDMN isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare KDMN to other stocks including JOANN Inc. (NASDAQ:JOAN), Sprague Resources LP (NYSE:SRLP), and Banco BBVA Argentina S.A. (NYSE:BBAR) to get a better sense of its popularity.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Joseph Edelman of Perceptive Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we're going to view the recent hedge fund action surrounding Kadmon Holdings, Inc. (NASDAQ:KDMN).
Do Hedge Funds Think KDMN Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 29 hedge funds with a bullish position in KDMN a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Among these funds, Perceptive Advisors held the most valuable stake in Kadmon Holdings, Inc. (NASDAQ:KDMN), which was worth $60.8 million at the end of the second quarter. On the second spot was Point72 Asset Management which amassed $40.7 million worth of shares. Third Point, Laurion Capital Management, and Vivo Capital 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 Great Point Partners allocated the biggest weight to Kadmon Holdings, Inc. (NASDAQ:KDMN), around 3.92% of its 13F portfolio. Dorset Management is also relatively very bullish on the stock, dishing out 1.15 percent of its 13F equity portfolio to KDMN.
Judging by the fact that Kadmon Holdings, Inc. (NASDAQ:KDMN) has witnessed falling interest from hedge fund managers, logic holds that there were a few hedgies that slashed their full holdings heading into Q3. Interestingly, Bihua Chen's Cormorant Asset Management dumped the biggest investment of the "upper crust" of funds followed by Insider Monkey, comprising close to $2.9 million in stock, and Andre F. Perold's HighVista Strategies was right behind this move, as the fund sold off about $0.1 million worth. These moves are interesting, as total 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 Kadmon Holdings, Inc. (NASDAQ:KDMN) but similarly valued. These stocks are JOANN Inc. (NASDAQ:JOAN), Sprague Resources LP (NYSE:SRLP), Banco BBVA Argentina S.A. (NYSE:BBAR), Flushing Financial Corporation (NASDAQ:FFIC), TrustCo Bank Corp NY (NASDAQ:TRST), Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX), and Adaptimmune Therapeutics plc (NASDAQ:ADAP). This group of stocks' market valuations are closest to KDMN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JOAN,16,460471,3 SRLP,1,745,1 BBAR,5,3843,1 FFIC,11,38066,0 TRST,13,26755,-2 LXRX,13,60560,0 ADAP,13,262246,-2 Average,10.3,121812,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.3 hedge funds with bullish positions and the average amount invested in these stocks was $122 million. That figure was $279 million in KDMN's case. JOANN Inc. (NASDAQ:JOAN) is the most popular stock in this table. On the other hand Sprague Resources LP (NYSE:SRLP) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Kadmon Holdings, Inc. (NASDAQ:KDMN) is more popular among hedge funds. Our overall hedge fund sentiment score for KDMN is 78.2. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 24% in 2021 through October 22nd but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on KDMN as the stock returned 143% since the end of June (through 10/22) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.