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Is KALV A Good Stock To Buy Now?

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Asma UL Husna
·6 min read
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At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not KalVista Pharmaceuticals, Inc. (NASDAQ:KALV) makes for a good investment right now.

Is KALV a good stock to buy now? Money managers were taking a pessimistic view. The number of long hedge fund positions went down by 3 recently. KalVista Pharmaceuticals, Inc. (NASDAQ:KALV) was in 15 hedge funds' portfolios at the end of September. The all time high for this statistic is 19. Our calculations also showed that KALV 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). There were 18 hedge funds in our database with KALV holdings at the end of June.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most traders, hedge funds are perceived as underperforming, old financial tools of yesteryear. While there are greater than 8000 funds in operation at the moment, Our experts hone in on the elite of this club, approximately 850 funds. It is estimated that this group of investors command the lion's share of all hedge funds' total asset base, and by watching their finest equity investments, Insider Monkey has determined numerous investment strategies that have historically beaten the market. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Phill Gross Adage Capital Phillip Gross
Phill Gross Adage Capital Phillip Gross

Phillip Gross of Adage Capital

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 take a look at the fresh hedge fund action surrounding KalVista Pharmaceuticals, Inc. (NASDAQ:KALV).

Do Hedge Funds Think KALV Is A Good Stock To Buy Now?

At third quarter's end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards KALV over the last 21 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey's hedge fund database, Albert Cha and Frank Kung's Vivo Capital has the number one position in KalVista Pharmaceuticals, Inc. (NASDAQ:KALV), worth close to $18.6 million, comprising 1.1% of its total 13F portfolio. The second most bullish fund manager is Ikarian Capital, led by Neil Shahrestani, holding a $15.6 million position; 1.1% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish include James A. Silverman's Opaleye Management, Phill Gross and Robert Atchinson's Adage Capital Management and Ken Greenberg and David Kim's Ghost Tree Capital. In terms of the portfolio weights assigned to each position Ghost Tree Capital allocated the biggest weight to KalVista Pharmaceuticals, Inc. (NASDAQ:KALV), around 1.27% of its 13F portfolio. Opaleye Management is also relatively very bullish on the stock, dishing out 1.15 percent of its 13F equity portfolio to KALV.

Due to the fact that KalVista Pharmaceuticals, Inc. (NASDAQ:KALV) has witnessed a decline in interest from the entirety of the hedge funds we track, logic holds that there was a specific group of fund managers who sold off their full holdings last quarter. It's worth mentioning that Renaissance Technologies dumped the biggest position of the "upper crust" of funds watched by Insider Monkey, comprising close to $0.5 million in stock, and Peter Muller's PDT Partners was right behind this move, as the fund said goodbye to about $0.2 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 3 funds last quarter.

Let's now review hedge fund activity in other stocks similar to KalVista Pharmaceuticals, Inc. (NASDAQ:KALV). These stocks are Genfit SA (NASDAQ:GNFT), Galera Therapeutics, Inc. (NASDAQ:GRTX), Peabody Energy Corporation (NYSE:BTU), South Plains Financial, Inc. (NASDAQ:SPFI), Red Violet, Inc. (NASDAQ:RDVT), Kezar Life Sciences, Inc. (NASDAQ:KZR), and RBB Bancorp (NASDAQ:RBB). This group of stocks' market caps match KALV's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GNFT,1,150,-1 GRTX,7,33786,0 BTU,20,99928,-3 SPFI,2,3871,1 RDVT,2,5446,-3 KZR,13,27196,-1 RBB,6,4972,-3 Average,7.3,25050,-1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.3 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $67 million in KALV's case. Peabody Energy Corporation (NYSE:BTU) is the most popular stock in this table. On the other hand Genfit SA (NASDAQ:GNFT) is the least popular one with only 1 bullish hedge fund positions. KalVista Pharmaceuticals, Inc. (NASDAQ:KALV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KALV is 62.5. 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 December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on KALV as the stock returned 50.5% since the end of Q3 (through 12/14) 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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