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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 PDS Biotechnology Corporation (NASDAQ:PDSB).
Is PDSB a good stock to buy? Hedge fund interest in PDS Biotechnology Corporation (NASDAQ:PDSB) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that PDSB isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Aptorum Group Limited (NASDAQ:APM), Luby's, Inc. (NYSE:LUB), and Heritage Global Inc. (NASDAQ:HGBL) to gather more data points.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Joel Greenblatt of Gotham Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let's review the latest hedge fund action encompassing PDS Biotechnology Corporation (NASDAQ:PDSB).
Do Hedge Funds Think PDSB Is A Good Stock To Buy Now?
At first quarter's end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in PDSB a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of PDS Biotechnology Corporation (NASDAQ:PDSB), with a stake worth $3 million reported as of the end of March. Trailing Renaissance Technologies was Ikarian Capital, which amassed a stake valued at $1.7 million. Millennium Management was 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 Ikarian Capital allocated the biggest weight to PDS Biotechnology Corporation (NASDAQ:PDSB), around 0.06% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0038 percent of its 13F equity portfolio to PDSB.
Since PDS Biotechnology Corporation (NASDAQ:PDSB) has experienced falling interest from the aggregate hedge fund industry, we can see that there lies a certain "tier" of funds who sold off their full holdings by the end of the first quarter. At the top of the heap, Joel Greenblatt's Gotham Asset Management cut the biggest investment of the "upper crust" of funds followed by Insider Monkey, comprising close to $0.2 million in stock. John Zaro's fund, Bourgeon Capital, also said goodbye to its stock, about $0 million worth. These transactions are intriguing to say the least, as total 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 PDS Biotechnology Corporation (NASDAQ:PDSB) but similarly valued. We will take a look at Aptorum Group Limited (NASDAQ:APM), Luby's, Inc. (NYSE:LUB), Heritage Global Inc. (NASDAQ:HGBL), electroCore, Inc. (NASDAQ:ECOR), Huttig Building Products, Inc. (NASDAQ:HBP), Soleno Therapeutics, Inc. (NASDAQ:SLNO), and Castor Maritime Inc. (NASDAQ:CTRM). All of these stocks' market caps match PDSB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position APM,2,301,0 LUB,4,10946,1 HGBL,3,1128,0 ECOR,5,1253,2 HBP,3,10764,0 SLNO,8,11931,-4 CTRM,1,5174,-3 Average,3.7,5928,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.7 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $5 million in PDSB's case. Soleno Therapeutics, Inc. (NASDAQ:SLNO) is the most popular stock in this table. On the other hand Castor Maritime Inc. (NASDAQ:CTRM) is the least popular one with only 1 bullish hedge fund positions. PDS Biotechnology Corporation (NASDAQ:PDSB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PDSB is 41.8. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on PDSB as the stock returned 165.1% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.