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Is MBIO A Good Stock To Buy Now?

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  • MBIO

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Mustang Bio, Inc. (NASDAQ:MBIO).

Is MBIO a good stock to buy now? Mustang Bio, Inc. (NASDAQ:MBIO) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 13 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that MBIO 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). At the end of this article we will also compare MBIO to other stocks including LSI Industries, Inc. (NASDAQ:LYTS), Gannett Co., Inc. (NYSE:GCI), and LCNB Corp. (NASDAQ:LCNB) to get a better sense of its popularity.

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

In the 21st century investor’s toolkit there are dozens of formulas stock market investors can use to appraise their stock investments. A duo of the most innovative formulas are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce their index-focused peers by a very impressive margin (see the details here).

Paul Marshall Marshall Wace
Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

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. Keeping this in mind we're going to take a glance at the fresh hedge fund action surrounding Mustang Bio, Inc. (NASDAQ:MBIO).

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

At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 7 hedge funds with a bullish position in MBIO a year ago. With the smart money's sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Among these funds, Millennium Management held the most valuable stake in Mustang Bio, Inc. (NASDAQ:MBIO), which was worth $4.6 million at the end of the third quarter. On the second spot was Endurant Capital Management which amassed $4.5 million worth of shares. Ikarian Capital, Two Sigma Advisors, and 683 Capital Partners 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 Endurant Capital Management allocated the biggest weight to Mustang Bio, Inc. (NASDAQ:MBIO), around 1.33% of its 13F portfolio. Ikarian Capital is also relatively very bullish on the stock, designating 0.18 percent of its 13F equity portfolio to MBIO.

Due to the fact that Mustang Bio, Inc. (NASDAQ:MBIO) has witnessed bearish sentiment from the smart money, it's safe to say that there was a specific group of hedgies that decided to sell off their entire stakes heading into Q4. Interestingly, Anand Parekh's Alyeska Investment Group dropped the biggest investment of all the hedgies watched by Insider Monkey, totaling close to $1.2 million in stock. Greg Martinez's fund, Parkman Healthcare Partners, also cut its stock, about $1 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's check out hedge fund activity in other stocks similar to Mustang Bio, Inc. (NASDAQ:MBIO). We will take a look at LSI Industries, Inc. (NASDAQ:LYTS), Gannett Co., Inc. (NYSE:GCI), LCNB Corp. (NASDAQ:LCNB), Stratus Properties Inc. (NASDAQ:STRS), Protara Therapeutics, Inc. (NASDAQ:TARA), Daktronics, Inc. (NASDAQ:DAKT), and Titan International Inc (NYSE:TWI). This group of stocks' market valuations are closest to MBIO's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LYTS,9,23658,3 GCI,11,14522,-1 LCNB,2,2996,0 STRS,3,26544,1 TARA,15,122192,7 DAKT,14,12586,0 TWI,13,38386,0 Average,9.6,34412,1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.6 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $17 million in MBIO's case. Protara Therapeutics, Inc. (NASDAQ:TARA) is the most popular stock in this table. On the other hand LCNB Corp. (NASDAQ:LCNB) is the least popular one with only 2 bullish hedge fund positions. Mustang Bio, Inc. (NASDAQ:MBIO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MBIO is 77.3. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 32.9% in 2020 through December 8th and beat the market again by 16.2 percentage points. Unfortunately MBIO wasn't nearly as popular as these 20 stocks and hedge funds that were betting on MBIO were disappointed as the stock returned -1.9% since the end of September (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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Disclosure: None. This article was originally published at Insider Monkey.

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