We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Nabriva Therapeutics plc (NASDAQ:NBRV) based on that data.
Nabriva Therapeutics plc (NASDAQ:NBRV) shareholders have witnessed a decrease in enthusiasm from smart money in recent months. NBRV was in 8 hedge funds' portfolios at the end of the first quarter of 2020. There were 9 hedge funds in our database with NBRV positions at the end of the previous quarter. Our calculations also showed that NBRV isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). 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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_341400" align="aligncenter" width="396"] Samuel Isaly of OrbiMed Advisors[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to review the recent hedge fund action encompassing Nabriva Therapeutics plc (NASDAQ:NBRV).
How have hedgies been trading Nabriva Therapeutics plc (NASDAQ:NBRV)?
At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the fourth quarter of 2019. By comparison, 12 hedge funds held shares or bullish call options in NBRV a year ago. With the smart money's capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
The largest stake in Nabriva Therapeutics plc (NASDAQ:NBRV) was held by OrbiMed Advisors, which reported holding $2.7 million worth of stock at the end of September. It was followed by Frazier Healthcare Partners with a $2.4 million position. Other investors bullish on the company included Vivo Capital, Rock Springs Capital Management, and Sabby Capital. In terms of the portfolio weights assigned to each position Frazier Healthcare Partners allocated the biggest weight to Nabriva Therapeutics plc (NASDAQ:NBRV), around 0.28% of its 13F portfolio. Vivo Capital is also relatively very bullish on the stock, earmarking 0.09 percent of its 13F equity portfolio to NBRV.
Seeing as Nabriva Therapeutics plc (NASDAQ:NBRV) has faced bearish sentiment from the smart money, it's safe to say that there was a specific group of money managers that decided to sell off their entire stakes in the first quarter. Intriguingly, John Overdeck and David Siegel's Two Sigma Advisors dropped the largest stake of all the hedgies followed by Insider Monkey, worth close to $0 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also dumped its stock, about $0 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds in the first quarter.
Let's now take a look at hedge fund activity in other stocks similar to Nabriva Therapeutics plc (NASDAQ:NBRV). We will take a look at China Automotive Systems, Inc. (NASDAQ:CAAS), OFS Capital Corp (NASDAQ:OFS), Assertio Holdings, Inc. (NASDAQ:ASRT), and Cypress Environmental Partners, L.P. (NYSE:CELP). This group of stocks' market valuations are similar to NBRV's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CAAS,1,796,0 OFS,3,625,1 ASRT,13,15168,-1 CELP,1,246,0 Average,4.5,4209,0 [/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 $4 million. That figure was $7 million in NBRV's case. Assertio Holdings, Inc. (NASDAQ:ASRT) is the most popular stock in this table. On the other hand China Automotive Systems, Inc. (NASDAQ:CAAS) is the least popular one with only 1 bullish hedge fund positions. Nabriva Therapeutics plc (NASDAQ:NBRV) 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 12.2% in 2020 through June 17th but still beat the market by 14.8 percentage points. Hedge funds were also right about betting on NBRV as the stock returned 57.6% in Q2 (through June 17th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.