While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, declining oil prices and the trade war with China, many smart money investors kept their optimism regarding the current bull run in the fourth quarter, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, 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 Revance Therapeutics Inc (NASDAQ:RVNC).
Revance Therapeutics Inc (NASDAQ:RVNC) shareholders have witnessed a decrease in hedge fund interest of late. Our calculations also showed that RVNC isn't among the 30 most popular stocks among hedge funds.
To most stock holders, hedge funds are assumed to be unimportant, old investment tools of years past. While there are more than 8000 funds trading at present, Our researchers look at the leaders of this club, about 750 funds. Most estimates calculate that this group of people administer the lion's share of the smart money's total asset base, and by keeping an eye on their first-class investments, Insider Monkey has discovered numerous investment strategies that have historically outpaced Mr. Market. Insider Monkey's flagship hedge fund strategy outrun the S&P 500 index by nearly 5 percentage points per annum since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
We're going to take a gander at the new hedge fund action regarding Revance Therapeutics Inc (NASDAQ:RVNC).
How are hedge funds trading Revance Therapeutics Inc (NASDAQ:RVNC)?
At Q4's end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in RVNC a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Revance Therapeutics Inc (NASDAQ:RVNC), which was worth $11.5 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $7.9 million worth of shares. Moreover, Sio Capital, D E Shaw, and MFN Partners were also bullish on Revance Therapeutics Inc (NASDAQ:RVNC), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Revance Therapeutics Inc (NASDAQ:RVNC) has faced bearish sentiment from hedge fund managers, logic holds that there exists a select few hedgies who were dropping their full holdings heading into Q3. Interestingly, John Overdeck and David Siegel's Two Sigma Advisors dropped the largest investment of the "upper crust" of funds monitored by Insider Monkey, valued at about $0.5 million in stock, and Cliff Asness's AQR Capital Management was right behind this move, as the fund cut about $0.4 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 2 funds heading into Q3.
Let's go over hedge fund activity in other stocks similar to Revance Therapeutics Inc (NASDAQ:RVNC). These stocks are Apellis Pharmaceuticals, Inc. (NASDAQ:APLS), Herc Holdings Inc. (NYSE:HRI), Acorda Therapeutics Inc (NASDAQ:ACOR), and Arlo Technologies, Inc. (NYSE:ARLO). This group of stocks' market caps are similar to RVNC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position APLS,17,171412,3 HRI,27,323111,3 ACOR,22,180486,1 ARLO,8,9670,-4 Average,18.5,171170,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $171 million. That figure was $27 million in RVNC's case. Herc Holdings Inc. (NYSE:HRI) is the most popular stock in this table. On the other hand Arlo Technologies, Inc. (NYSE:ARLO) is the least popular one with only 8 bullish hedge fund positions. Revance Therapeutics Inc (NASDAQ:RVNC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately RVNC wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); RVNC investors were disappointed as the stock returned -33.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.