Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Outlook Therapeutics, Inc. (NASDAQ:OTLK).
Outlook Therapeutics, Inc. (NASDAQ:OTLK) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds' portfolios at the end of the first quarter of 2020. At the end of this article we will also compare OTLK to other stocks including Yunhong International (NASDAQ:ZGYHU), California Resources Corporation (NYSE:CRC), and Altimmune, Inc. (NASDAQ:ALT) to get a better sense of its popularity. Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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'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.
[caption id="attachment_567991" align="aligncenter" width="397"] Joseph Edelman of Perceptive Advisors[/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. Keeping this in mind let's take a look at the latest hedge fund action surrounding Outlook Therapeutics, Inc. (NASDAQ:OTLK).
Hedge fund activity in Outlook Therapeutics, Inc. (NASDAQ:OTLK)
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2019. On the other hand, there were a total of 6 hedge funds with a bullish position in OTLK a year ago. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
The largest stake in Outlook Therapeutics, Inc. (NASDAQ:OTLK) was held by Sabby Capital, which reported holding $1.9 million worth of stock at the end of September. It was followed by Armistice Capital with a $0.8 million position. Other investors bullish on the company included Sphera Global Healthcare Fund, Cormorant Asset Management, and Perceptive Advisors. In terms of the portfolio weights assigned to each position Sabby Capital allocated the biggest weight to Outlook Therapeutics, Inc. (NASDAQ:OTLK), around 0.81% of its 13F portfolio. Armistice Capital is also relatively very bullish on the stock, setting aside 0.05 percent of its 13F equity portfolio to OTLK.
Due to the fact that Outlook Therapeutics, Inc. (NASDAQ:OTLK) has faced bearish sentiment from the entirety of the hedge funds we track, it's easy to see that there exists a select few hedge funds that decided to sell off their entire stakes heading into Q4. Intriguingly, Renaissance Technologies sold off the biggest stake of the "upper crust" of funds monitored by Insider Monkey, totaling an estimated $0 million in stock, and Michael Gelband's ExodusPoint Capital was right behind this move, as the fund dumped about $0 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Outlook Therapeutics, Inc. (NASDAQ:OTLK) but similarly valued. We will take a look at Yunhong International (NASDAQ:ZGYHU), California Resources Corporation (NYSE:CRC), Altimmune, Inc. (NASDAQ:ALT), and Condor Hospitality Trust, Inc. (NYSE:CDOR). This group of stocks' market values are closest to OTLK's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZGYHU,5,19649,5 CRC,7,612,-12 ALT,2,2283,-3 CDOR,4,2346,-3 Average,4.5,6223,-3.25 [/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 $6 million. That figure was $3 million in OTLK's case. California Resources Corporation (NYSE:CRC) is the most popular stock in this table. On the other hand Altimmune, Inc. (NASDAQ:ALT) is the least popular one with only 2 bullish hedge fund positions. Outlook Therapeutics, Inc. (NASDAQ:OTLK) 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 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on OTLK as the stock returned 86.4% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.