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Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 817 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about PAVmed Inc. (NASDAQ:PAVM).
Is PAVmed Inc. (NASDAQ:PAVM) an exceptional investment now? Hedge funds were betting on the stock. The number of bullish hedge fund positions increased by 2 recently. PAVmed Inc. (NASDAQ:PAVM) was in 5 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 4. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PAVM 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John A. Levin of Levin Capital Strategies
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 let's take a gander at the key hedge fund action surrounding PAVmed Inc. (NASDAQ:PAVM).
How are hedge funds trading PAVmed Inc. (NASDAQ:PAVM)?
At the end of September, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 67% from the second quarter of 2020. On the other hand, there were a total of 3 hedge funds with a bullish position in PAVM a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Sabby Capital was the largest shareholder of PAVmed Inc. (NASDAQ:PAVM), with a stake worth $0.4 million reported as of the end of September. Trailing Sabby Capital was Levin Capital Strategies, which amassed a stake valued at $0.3 million. Levin Capital Strategies, AQR Capital Management, and Ionic Capital 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 Sabby Capital allocated the biggest weight to PAVmed Inc. (NASDAQ:PAVM), around 0.05% of its 13F portfolio. Levin Capital Strategies is also relatively very bullish on the stock, dishing out 0.04 percent of its 13F equity portfolio to PAVM.
Now, key hedge funds have been driving this bullishness. AQR Capital Management, managed by Cliff Asness, initiated the biggest position in PAVmed Inc. (NASDAQ:PAVM). AQR Capital Management had $0.1 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0.1 million investment in the stock during the quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as PAVmed Inc. (NASDAQ:PAVM) but similarly valued. We will take a look at Beyond Air, Inc. (NASDAQ:XAIR), Dynagas LNG Partners LP (NYSE:DLNG), 22nd Century Group, Inc (NYSE:XXII), Provident Financial Holdings, Inc. (NASDAQ:PROV), Townsquare Media Inc (NYSE:TSQ), Luby's, Inc. (NYSE:LUB), and Pacific Mercantile Bancorp (NASDAQ:PMBC). All of these stocks' market caps are closest to PAVM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position XAIR,1,2652,-3 DLNG,1,153,0 XXII,4,546,-4 PROV,1,4802,0 TSQ,6,19036,0 LUB,5,9572,1 PMBC,6,17474,-2 Average,3.4,7748,-1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.4 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $1 million in PAVM's case. Townsquare Media Inc (NYSE:TSQ) is the most popular stock in this table. On the other hand Beyond Air, Inc. (NASDAQ:XAIR) is the least popular one with only 1 bullish hedge fund positions. PAVmed Inc. (NASDAQ:PAVM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PAVM is 77. 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. 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 November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on PAVM as the stock returned 10.1% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.