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While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Protalix BioTherapeutics Inc. (NYSE:PLX).
Is PLX stock a good buy? Protalix BioTherapeutics Inc. (NYSE:PLX) was in 6 hedge funds' portfolios at the end of March. The all time high for this statistic is 7. PLX investors should pay attention to an increase in hedge fund sentiment recently. There were 3 hedge funds in our database with PLX positions at the end of the fourth quarter. Our calculations also showed that PLX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Nathan Fischel of DAFNA Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $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. With all of this in mind let's take a look at the new hedge fund action regarding Protalix BioTherapeutics Inc. (NYSE:PLX).
Do Hedge Funds Think PLX Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from the previous quarter. On the other hand, there were a total of 2 hedge funds with a bullish position in PLX a year ago. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
The largest stake in Protalix BioTherapeutics Inc. (NYSE:PLX) was held by Burrage Capital Management, which reported holding $9.5 million worth of stock at the end of December. It was followed by DAFNA Capital Management with a $5.4 million position. Other investors bullish on the company included Renaissance Technologies, Schonfeld Strategic Advisors, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Burrage Capital Management allocated the biggest weight to Protalix BioTherapeutics Inc. (NYSE:PLX), around 7.68% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, dishing out 1.28 percent of its 13F equity portfolio to PLX.
As industrywide interest jumped, key money managers have been driving this bullishness. DAFNA Capital Management, managed by Nathan Fischel, established the largest position in Protalix BioTherapeutics Inc. (NYSE:PLX). DAFNA Capital Management had $5.4 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors also initiated a $0.4 million position during the quarter. The other funds with new positions in the stock are Benjamin A. Smith's Laurion Capital Management and Ken Griffin's Citadel Investment Group.
Let's now take a look at hedge fund activity in other stocks similar to Protalix BioTherapeutics Inc. (NYSE:PLX). These stocks are Avinger Inc (NASDAQ:AVGR), Summit Midstream Partners LP (NYSE:SMLP), Pangaea Logistics Solutions, Ltd. (NASDAQ:PANL), Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS), Ayala Pharmaceuticals, Inc. (NASDAQ:AYLA), Apollo Endosurgery, Inc. (NASDAQ:APEN), and Yatra Online, Inc. (NASDAQ:YTRA). This group of stocks' market caps match PLX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AVGR,3,845,1 SMLP,1,1336,0 PANL,2,640,1 PIRS,14,36882,0 AYLA,4,13951,0 APEN,9,25963,5 YTRA,7,41991,-3 Average,5.7,17373,0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.7 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $18 million in PLX's case. Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) is the most popular stock in this table. On the other hand Summit Midstream Partners LP (NYSE:SMLP) is the least popular one with only 1 bullish hedge fund positions. Protalix BioTherapeutics Inc. (NYSE:PLX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PLX is 52.9. 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 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 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately PLX wasn't nearly as popular as these 5 stocks and hedge funds that were betting on PLX were disappointed as the stock returned -55.4% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.