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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 887 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31st holdings, data that is available nowhere else. Should you consider Kadmon Holdings, Inc. (NYSE:KDMN) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is KDMN stock a buy? Prominent investors were taking an optimistic view. The number of long hedge fund bets increased by 7 lately. Kadmon Holdings, Inc. (NYSE:KDMN) was in 31 hedge funds' portfolios at the end of December. The all time high for this statistic is 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that KDMN isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 24 hedge funds in our database with KDMN holdings at the end of September.
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 124 percentage points since March 2017 (see the details here).
Dan Loeb of Third Point
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 let's take a look at the latest hedge fund action surrounding Kadmon Holdings, Inc. (NYSE:KDMN).
Do Hedge Funds Think KDMN Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from the third quarter of 2020. By comparison, 25 hedge funds held shares or bullish call options in KDMN a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Joseph Edelman's Perceptive Advisors has the number one position in Kadmon Holdings, Inc. (NYSE:KDMN), worth close to $65.2 million, accounting for 0.7% of its total 13F portfolio. On Perceptive Advisors's heels is Point72 Asset Management, led by Steve Cohen, holding a $32.6 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism encompass Dan Loeb's Third Point, Mitchell Blutt's Consonance Capital Management and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Consonance Capital Management allocated the biggest weight to Kadmon Holdings, Inc. (NYSE:KDMN), around 2.85% of its 13F portfolio. Great Point Partners is also relatively very bullish on the stock, dishing out 2.75 percent of its 13F equity portfolio to KDMN.
As one would reasonably expect, specific money managers were breaking ground themselves. Eversept Partners, managed by Kamran Moghtaderi, initiated the most outsized position in Kadmon Holdings, Inc. (NYSE:KDMN). Eversept Partners had $10 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson's Adage Capital Management also made a $6.2 million investment in the stock during the quarter. The following funds were also among the new KDMN investors: Ting Jia's Octagon Capital Advisors, Lee Ainslie's Maverick Capital, and Renaissance Technologies.
Let's now take a look at hedge fund activity in other stocks similar to Kadmon Holdings, Inc. (NYSE:KDMN). We will take a look at Sprott Inc. (NYSE:SII), ADTRAN, Inc. (NASDAQ:ADTN), Ambac Financial Group, Inc. (NASDAQ:AMBC), Vermilion Energy Inc (NYSE:VET), Lands' End, Inc. (NASDAQ:LE), World Acceptance Corp. (NASDAQ:WRLD), and Avid Technology, Inc. (NASDAQ:AVID). This group of stocks' market caps match KDMN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SII,17,109365,3 ADTN,11,79171,-2 AMBC,18,93632,3 VET,10,12545,4 LE,11,108477,2 WRLD,11,98958,-1 AVID,26,252562,7 Average,14.9,107816,2.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.9 hedge funds with bullish positions and the average amount invested in these stocks was $108 million. That figure was $322 million in KDMN's case. Avid Technology, Inc. (NASDAQ:AVID) is the most popular stock in this table. On the other hand Vermilion Energy Inc (NYSE:VET) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Kadmon Holdings, Inc. (NYSE:KDMN) is more popular among hedge funds. Our overall hedge fund sentiment score for KDMN is 90. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Unfortunately KDMN wasn't nearly as popular as these 30 stocks and hedge funds that were betting on KDMN were disappointed as the stock returned -11.3% since the end of the fourth quarter (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.