In this article we will check out the progression of hedge fund sentiment towards Quotient Limited (NASDAQ:QTNT) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Quotient Limited (NASDAQ:QTNT) investors should pay attention to a decrease in hedge fund interest of late. Our calculations also showed that QTNT isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_567991" align="aligncenter" width="399"] Joseph Edelman of Perceptive Advisors[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. 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 view the key hedge fund action surrounding Quotient Limited (NASDAQ:QTNT).
Hedge fund activity in Quotient Limited (NASDAQ:QTNT)
At Q1's end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards QTNT over the last 18 quarters. With hedge funds' capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
The largest stake in Quotient Limited (NASDAQ:QTNT) was held by Perceptive Advisors, which reported holding $52.5 million worth of stock at the end of September. It was followed by Polar Capital with a $30.1 million position. Other investors bullish on the company included Highbridge Capital Management, Cormorant Asset Management, and Farallon Capital. In terms of the portfolio weights assigned to each position Highbridge Capital Management allocated the biggest weight to Quotient Limited (NASDAQ:QTNT), around 1.76% of its 13F portfolio. Pura Vida Investments is also relatively very bullish on the stock, dishing out 1.69 percent of its 13F equity portfolio to QTNT.
Judging by the fact that Quotient Limited (NASDAQ:QTNT) has experienced declining sentiment from hedge fund managers, it's safe to say that there was a specific group of money managers who sold off their entire stakes by the end of the first quarter. It's worth mentioning that Kevin Kotler's Broadfin Capital said goodbye to the biggest investment of the "upper crust" of funds watched by Insider Monkey, totaling an estimated $19 million in stock. Peter S. Park's fund, Park West Asset Management, also said goodbye to its stock, about $9.8 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 2 funds by the end of the first quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Quotient Limited (NASDAQ:QTNT) but similarly valued. These stocks are Kimbell Royalty Partners, LP (NYSE:KRP), Wanda Sports Group Company Limited (NASDAQ:WSG), Noble Midstream Partners LP (NASDAQ:NBLX), and Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA). This group of stocks' market values are similar to QTNT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KRP,9,10619,3 WSG,6,5944,3 NBLX,2,1267,-3 KNSA,10,148521,1 Average,6.75,41588,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $145 million in QTNT's case. Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA) is the most popular stock in this table. On the other hand Noble Midstream Partners LP (NASDAQ:NBLX) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Quotient Limited (NASDAQ:QTNT) is more popular among hedge funds. 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 returned 12.2% in 2020 through June 17th but still managed to beat the market by 14.8 percentage points. Hedge funds were also right about betting on QTNT as the stock returned 102.3% so far in Q2 (through June 17th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.