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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) based on that data.
Is SPPI a good stock to buy now? Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) investors should pay attention to an increase in hedge fund sentiment of late. Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) was in 13 hedge funds' portfolios at the end of September. The all time high for this statistic is 23. Our calculations also showed that SPPI 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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. 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 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Nathan Fischel of DAFNA Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now let's take a peek at the new hedge fund action encompassing Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI).
Do Hedge Funds Think SPPI Is A Good Stock To Buy Now?
At the end of September, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from the second quarter of 2020. By comparison, 8 hedge funds held shares or bullish call options in SPPI 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.
Among these funds, Armistice Capital held the most valuable stake in Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI), which was worth $30.9 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $13.8 million worth of shares. D E Shaw, Two Sigma Advisors, and Millennium Management were 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 Armistice Capital allocated the biggest weight to Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI), around 1.12% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, dishing out 0.68 percent of its 13F equity portfolio to SPPI.
Consequently, specific money managers have been driving this bullishness. Armistice Capital, managed by Steven Boyd, created the largest position in Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI). Armistice Capital had $30.9 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $2.1 million position during the quarter. The other funds with brand new SPPI positions are Nathan Fischel's DAFNA Capital Management, Steve Cohen's Point72 Asset Management, and Dmitry Balyasny's Balyasny Asset Management.
Let's also examine hedge fund activity in other stocks similar to Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI). We will take a look at Diebold Nixdorf Incorporated (NYSE:DBD), Hawaiian Holdings, Inc. (NASDAQ:HA), Golar LNG Limited (NASDAQ:GLNG), Seacor Holdings, Inc. (NYSE:CKH), Republic Bancorp, Inc. (NASDAQ:RBCAA), Groupon Inc (NASDAQ:GRPN), and SpartanNash Company (NASDAQ:SPTN). This group of stocks' market values resemble SPPI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DBD,15,125411,-1 HA,9,29092,-3 GLNG,22,151248,5 CKH,10,86903,2 RBCAA,4,5485,-1 GRPN,16,136870,-3 SPTN,12,41184,-3 Average,12.6,82313,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.6 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $57 million in SPPI's case. Golar LNG Limited (NASDAQ:GLNG) is the most popular stock in this table. On the other hand Republic Bancorp, Inc.(NASDAQ:RBCAA) is the least popular one with only 4 bullish hedge fund positions. Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SPPI is 50. 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 gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on SPPI as the stock returned 18.4% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.