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 at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Lumos Pharma, Inc. (NASDAQ:LUMO).
Hedge fund interest in Lumos Pharma, Inc. (NASDAQ:LUMO) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare LUMO to other stocks including Allied Healthcare Products Inc (NASDAQ:AHPI), International Tower Hill Mines Ltd (NYSE:THM), and Civeo Corporation (NYSE:CVEO) to get a better sense of its popularity.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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James E. Flynn of Deerfield ManagementJames E. FlynnJames E. Flynn[/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 stocks recommended/scorned by legendary Bill Miller. 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. With all of this in mind let's take a look at the fresh hedge fund action surrounding Lumos Pharma, Inc. (NASDAQ:LUMO).
How are hedge funds trading Lumos Pharma, Inc. (NASDAQ:LUMO)?
Heading into the second quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 4 hedge funds held shares or bullish call options in LUMO a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, James E. Flynn's Deerfield Management has the biggest position in Lumos Pharma, Inc. (NASDAQ:LUMO), worth close to $8 million, corresponding to 0.3% of its total 13F portfolio. On Deerfield Management's heels is Lion Point, led by Didric Cederholm, holding a $3.5 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Remaining peers that hold long positions consist of Renaissance Technologies, Israel Englander's Millennium Management and John Overdeck and David Siegel's Two Sigma Advisors. In terms of the portfolio weights assigned to each position Lion Point allocated the biggest weight to Lumos Pharma, Inc. (NASDAQ:LUMO), around 0.91% of its 13F portfolio. Deerfield Management is also relatively very bullish on the stock, setting aside 0.25 percent of its 13F equity portfolio to LUMO.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Deerfield Management).
Let's check out hedge fund activity in other stocks similar to Lumos Pharma, Inc. (NASDAQ:LUMO). These stocks are Allied Healthcare Products Inc (NASDAQ:AHPI), International Tower Hill Mines Ltd (NYSE:THM), Civeo Corporation (NYSE:CVEO), and Epsilon Energy Ltd. (NASDAQ:EPSN). This group of stocks' market values match LUMO's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AHPI,1,5000,0 THM,4,37049,0 CVEO,12,27822,-6 EPSN,1,7076,0 Average,4.5,19237,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.5 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $15 million in LUMO's case. Civeo Corporation (NYSE:CVEO) is the most popular stock in this table. On the other hand Allied Healthcare Products Inc (NASDAQ:AHPI) is the least popular one with only 1 bullish hedge fund positions. Lumos Pharma, Inc. (NASDAQ:LUMO) is not the most popular stock in this group but hedge fund interest is still above average. 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 but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on LUMO as the stock returned 63.6% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.