The market has been volatile in the last few months as the Federal Reserve finalized its rate cuts and uncertainty looms over trade negotiations with China. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points over the last 12 months. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure since summer months, though some funds increased their exposure dramatically at the end of Q3 and the beginning of Q4. In this article, we analyze what the smart money thinks of NewLink Genetics Corp (NASDAQ:NLNK) and find out how it is affected by hedge funds' moves.
NewLink Genetics Corp (NASDAQ:NLNK) has experienced an increase in enthusiasm from smart money recently. NLNK was in 6 hedge funds' portfolios at the end of September. There were 5 hedge funds in our database with NLNK positions at the end of the previous quarter. Our calculations also showed that NLNK isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are tons of formulas shareholders can use to analyze stocks. A couple of the most under-the-radar formulas are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the top fund managers can outpace their index-focused peers by a significant amount (see the details here).
[caption id="attachment_26073" align="alignnone" width="600"] Jim Simons of Renaissance Technologies[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Now let's review the recent hedge fund action regarding NewLink Genetics Corp (NASDAQ:NLNK).
How have hedgies been trading NewLink Genetics Corp (NASDAQ:NLNK)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NLNK over the last 17 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.
Among these funds, Renaissance Technologies held the most valuable stake in NewLink Genetics Corp (NASDAQ:NLNK), which was worth $4.7 million at the end of the third quarter. On the second spot was Millennium Management which amassed $0.8 million worth of shares. Eversept Partners, Two Sigma Advisors, and Citadel Investment Group 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 Eversept Partners allocated the biggest weight to NewLink Genetics Corp (NASDAQ:NLNK), around 0.14% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.004 percent of its 13F equity portfolio to NLNK.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Eversept Partners, managed by Kamran Moghtaderi, initiated the biggest position in NewLink Genetics Corp (NASDAQ:NLNK). Eversept Partners had $0.4 million invested in the company at the end of the quarter.
Let's go over hedge fund activity in other stocks similar to NewLink Genetics Corp (NASDAQ:NLNK). We will take a look at Catalyst Biosciences Inc (NASDAQ:CBIO), AGBA Acquisition Limited (NASDAQ:AGBA), Pluristem Therapeutics Inc. (NASDAQ:PSTI), and ALJ Regional Holdings, Inc. (NASDAQ:ALJJ). This group of stocks' market valuations resemble NLNK's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CBIO,11,18597,0 AGBA,3,4291,3 PSTI,3,868,1 ALJJ,3,826,1 Average,5,6146,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $6 million in NLNK's case. Catalyst Biosciences Inc (NASDAQ:CBIO) is the most popular stock in this table. On the other hand AGBA Acquisition Limited (NASDAQ:AGBA) is the least popular one with only 3 bullish hedge fund positions. NewLink Genetics Corp (NASDAQ:NLNK) is not the most popular stock in this group but hedge fund interest is still above average. 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately NLNK wasn't nearly as popular as these 20 stocks and hedge funds that were betting on NLNK were disappointed as the stock returned -4.4% during the fourth quarter (through the end of November) 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.
Disclosure: None. This article was originally published at Insider Monkey.