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Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Ovid Therapeutics Inc. (NASDAQ:OVID) to find out whether there were any major changes in hedge funds' views.
Is OVID a good stock to buy now? Ovid Therapeutics Inc. (NASDAQ:OVID) investors should be aware of an increase in hedge fund sentiment in recent months. Ovid Therapeutics Inc. (NASDAQ:OVID) was in 15 hedge funds' portfolios at the end of September. The all time high for this statistic is 17. There were 11 hedge funds in our database with OVID holdings at the end of June. Our calculations also showed that OVID 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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Peter Kolchinsky of RA Capital Management
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. With all of this in mind let's take a peek at the latest hedge fund action regarding Ovid Therapeutics Inc. (NASDAQ:OVID).
Do Hedge Funds Think OVID Is A Good Stock To Buy Now?
At Q3's end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 36% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in OVID over the last 21 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, Biotechnology Value Fund / BVF Inc was the largest shareholder of Ovid Therapeutics Inc. (NASDAQ:OVID), with a stake worth $20.8 million reported as of the end of September. Trailing Biotechnology Value Fund / BVF Inc was Vivo Capital, which amassed a stake valued at $7.2 million. Baker Bros. Advisors, RA Capital Management, and Platinum Asset Management 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 AWH Capital allocated the biggest weight to Ovid Therapeutics Inc. (NASDAQ:OVID), around 1.81% of its 13F portfolio. Biotechnology Value Fund / BVF Inc is also relatively very bullish on the stock, designating 1.13 percent of its 13F equity portfolio to OVID.
Consequently, key money managers have been driving this bullishness. Vivo Capital, managed by Albert Cha and Frank Kung, initiated the biggest position in Ovid Therapeutics Inc. (NASDAQ:OVID). Vivo Capital had $7.2 million invested in the company at the end of the quarter. Austin Wiggins Hopper's AWH Capital also made a $1.3 million investment in the stock during the quarter. The other funds with brand new OVID positions are John Overdeck and David Siegel's Two Sigma Advisors, Cliff Asness's AQR Capital Management, and Greg Eisner's Engineers Gate Manager.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Ovid Therapeutics Inc. (NASDAQ:OVID) but similarly valued. We will take a look at NI Holdings, Inc. (NASDAQ:NODK), Caleres Inc (NYSE:CAL), Helix Energy Solutions Group Inc. (NYSE:HLX), Tuscan Holdings Corp. (NASDAQ:THCB), Benefitfocus Inc (NASDAQ:BNFT), Alexco Resource Corp. (NYSE:AXU), and AdvanSix Inc. (NYSE:ASIX). This group of stocks' market valuations resemble OVID's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NODK,5,24232,-1 CAL,17,30223,2 HLX,14,16489,4 THCB,12,71112,2 BNFT,18,54294,5 AXU,2,671,-3 ASIX,14,42435,-2 Average,11.7,34208,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.7 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $39 million in OVID's case. Benefitfocus Inc (NASDAQ:BNFT) is the most popular stock in this table. On the other hand Alexco Resource Corp. (NYSE:AXU) is the least popular one with only 2 bullish hedge fund positions. Ovid Therapeutics Inc. (NASDAQ:OVID) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OVID is 76.1. 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 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately OVID wasn't nearly as popular as these 20 stocks and hedge funds that were betting on OVID were disappointed as the stock returned -54% since the end of September (through 12/14) 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.