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Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Vincerx Pharma, Inc. (NASDAQ:VINC) changed recently.
Is VINC a good stock to buy? Vincerx Pharma, Inc. (NASDAQ:VINC) was in 16 hedge funds' portfolios at the end of March. The all time high for this statistic is 11. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. VINC shareholders have witnessed an increase in hedge fund interest of late. There were 11 hedge funds in our database with VINC holdings at the end of December. Our calculations also showed that VINC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Ken Griffin of Citadel Investment Group
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. Now we're going to take a glance at the new hedge fund action encompassing Vincerx Pharma, Inc. (NASDAQ:VINC).
Do Hedge Funds Think VINC Is A Good Stock To Buy Now?
At Q1's end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 45% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in VINC over the last 23 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
The largest stake in Vincerx Pharma, Inc. (NASDAQ:VINC) was held by Holocene Advisors, which reported holding $11.5 million worth of stock at the end of December. It was followed by Tang Capital Management with a $9.7 million position. Other investors bullish on the company included Logos Capital, Ikarian Capital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Acuta Capital Partners allocated the biggest weight to Vincerx Pharma, Inc. (NASDAQ:VINC), around 2.74% of its 13F portfolio. Tang Capital Management is also relatively very bullish on the stock, dishing out 2.72 percent of its 13F equity portfolio to VINC.
Consequently, specific money managers were breaking ground themselves. Tang Capital Management, managed by Kevin C. Tang, created the largest position in Vincerx Pharma, Inc. (NASDAQ:VINC). Tang Capital Management had $9.7 million invested in the company at the end of the quarter. Arsani William's Logos Capital also made a $9.3 million investment in the stock during the quarter. The following funds were also among the new VINC investors: Ken Griffin's Citadel Investment Group, Manfred Yu's Acuta Capital Partners, and Manfred Yu's Acuta Capital Partners.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Vincerx Pharma, Inc. (NASDAQ:VINC) but similarly valued. These stocks are Cerecor Inc. (NASDAQ:CERC), BioVie Inc. (NASDAQ:BIVI), Park Aerospace Corp. (NYSE:PKE), BurgerFi International, Inc. (NASDAQ:BFI), Cabaletta Bio, Inc. (NASDAQ:CABA), Torchlight Energy Resources, Inc. (NASDAQ:TRCH), and eMagin Corporation (NYSE:EMAN). This group of stocks' market values are closest to VINC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CERC,10,145224,2 BIVI,1,447,0 PKE,8,33491,-5 BFI,9,51873,4 CABA,11,91768,3 TRCH,4,3215,3 EMAN,9,5985,4 Average,7.4,47429,1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.4 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $88 million in VINC's case. Cabaletta Bio, Inc. (NASDAQ:CABA) is the most popular stock in this table. On the other hand BioVie Inc. (NASDAQ:BIVI) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Vincerx Pharma, Inc. (NASDAQ:VINC) is more popular among hedge funds. Our overall hedge fund sentiment score for VINC is 90. 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 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 28.5% in 2021 through July 23rd and still beat the market by 10.1 percentage points. Unfortunately VINC wasn't nearly as popular as these 5 stocks and hedge funds that were betting on VINC were disappointed as the stock returned -20.8% since the end of the first quarter (through 7/23) 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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.