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Were Hedge Funds Right About EyePoint Pharmaceuticals, Inc. (EYPT)?

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Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT).

EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT) has seen an increase in hedge fund sentiment of late. EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT) was in 17 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 10. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EYPT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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Peter Kolchinsky of RA Capital Management

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. With all of this in mind we're going to take a look at the fresh hedge fund action surrounding EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT).

Do Hedge Funds Think EYPT Is A Good Stock To Buy Now?

At Q1's end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 240% from one quarter earlier. On the other hand, there were a total of 3 hedge funds with a bullish position in EYPT 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.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the most valuable position in EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT). Adage Capital Management has a $15.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Peter Kolchinsky of RA Capital Management, with a $12.7 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other professional money managers that are bullish contain Aaron Cowen's Suvretta Capital Management, Ken Griffin's Citadel Investment Group and Richard Driehaus's Driehaus Capital. In terms of the portfolio weights assigned to each position Stonepine Capital allocated the biggest weight to EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT), around 1.81% of its 13F portfolio. SilverArc Capital is also relatively very bullish on the stock, dishing out 1.66 percent of its 13F equity portfolio to EYPT.

With a general bullishness amongst the heavyweights, key money managers have jumped into EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT) headfirst. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the largest position in EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT). Adage Capital Management had $15.4 million invested in the company at the end of the quarter. Peter Kolchinsky's RA Capital Management also made a $12.7 million investment in the stock during the quarter. The following funds were also among the new EYPT investors: Aaron Cowen's Suvretta Capital Management, Richard Driehaus's Driehaus Capital, and Srini Akkaraju and Michael Dybbs's Samsara BioCapital.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT) but similarly valued. We will take a look at BRT Apartments Corp (NYSE:BRT), Nisun International Enterprise Development Group Co., Ltd (NASDAQ:NISN), Tiptree Inc. (NASDAQ:TIPT), Orphazyme A/S (NASDAQ:ORPH), Precision Drilling Corp (NYSE:PDS), RR Donnelley & Sons Company (NYSE:RRD), and Escalade, Inc. (NASDAQ:ESCA). This group of stocks' market valuations are closest to EYPT's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BRT,3,12353,-1 NISN,2,3176,1 TIPT,4,4995,0 ORPH,3,2309,1 PDS,6,25038,0 RRD,23,65071,10 ESCA,3,10058,-3 Average,6.3,17571,1.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.3 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $82 million in EYPT's case. RR Donnelley & Sons Company (NYSE:RRD) is the most popular stock in this table. On the other hand Nisun International Enterprise Development Group Co., Ltd (NASDAQ:NISN) is the least popular one with only 2 bullish hedge fund positions. EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EYPT is 75.7. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 beat the market again by 10.1 percentage points. Unfortunately EYPT wasn't nearly as popular as these 5 stocks and hedge funds that were betting on EYPT were disappointed as the stock returned -18.9% since the end of March (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 many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.