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In this article we will take a look at whether hedge funds think Solid Biosciences Inc. (NASDAQ:SLDB) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is SLDB a good stock to buy now? The best stock pickers were reducing their bets on the stock. The number of bullish hedge fund bets dropped by 1 in recent months. Solid Biosciences Inc. (NASDAQ:SLDB) was in 11 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 19. Our calculations also showed that SLDB 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). There were 12 hedge funds in our database with SLDB positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most market participants, hedge funds are viewed as underperforming, old financial vehicles of yesteryear. While there are over 8000 funds trading at the moment, We choose to focus on the elite of this club, approximately 850 funds. These hedge fund managers preside over most of the hedge fund industry's total capital, and by following their matchless investments, Insider Monkey has unearthed a few investment strategies that have historically surpassed the broader indices. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Kamran Moghtaderi of Eversept Partners
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Do Hedge Funds Think SLDB Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in SLDB a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Solid Biosciences Inc. (NASDAQ:SLDB) was held by Perceptive Advisors, which reported holding $13.7 million worth of stock at the end of September. It was followed by RA Capital Management with a $9.3 million position. Other investors bullish on the company included Ikarian Capital, Eversept Partners, and D E Shaw. In terms of the portfolio weights assigned to each position Perceptive Advisors allocated the biggest weight to Solid Biosciences Inc. (NASDAQ:SLDB), around 0.2% of its 13F portfolio. RA Capital Management is also relatively very bullish on the stock, earmarking 0.17 percent of its 13F equity portfolio to SLDB.
Due to the fact that Solid Biosciences Inc. (NASDAQ:SLDB) has faced falling interest from the aggregate hedge fund industry, logic holds that there was a specific group of money managers who sold off their entire stakes by the end of the third quarter. It's worth mentioning that Greg Eisner's Engineers Gate Manager sold off the biggest stake of the 750 funds tracked by Insider Monkey, comprising an estimated $0 million in stock. Campbell Wilson's fund, Old Well Partners, also sold off its stock, about $0 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 1 funds by the end of the third quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Solid Biosciences Inc. (NASDAQ:SLDB) but similarly valued. We will take a look at OncoCyte Corporation (NYSE:OCX), Lipocine Inc (NASDAQ:LPCN), Frequency Electronics, Inc. (NASDAQ:FEIM), China Automotive Systems, Inc. (NASDAQ:CAAS), NeuroBo Pharmaceuticals, Inc. (NASDAQ:NRBO), Riverview Bancorp, Inc. (NASDAQ:RVSB), and CONSOL Coal Resources LP (NYSE:CCR). All of these stocks' market caps are closest to SLDB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OCX,5,29185,-2 LPCN,3,663,-1 FEIM,4,9778,0 CAAS,1,1503,0 NRBO,2,1406,-1 RVSB,10,4842,1 CCR,2,18344,0 Average,3.9,9389,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.9 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $27 million in SLDB's case. Riverview Bancorp, Inc. (NASDAQ:RVSB) is the most popular stock in this table. On the other hand China Automotive Systems, Inc. (NASDAQ:CAAS) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Solid Biosciences Inc. (NASDAQ:SLDB) is more popular among hedge funds. Our overall hedge fund sentiment score for SLDB is 71.4. 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 returned 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on SLDB as the stock returned 81.3% since the end of September (through 12/8) 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.
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Disclosure: None. This article was originally published at Insider Monkey.