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Were Hedge Funds Right About InflaRx N.V. (IFRX)?

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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on InflaRx N.V. (NASDAQ:IFRX).

Is InflaRx N.V. (NASDAQ:IFRX) a buy right now? Prominent investors were becoming hopeful. The number of long hedge fund positions advanced by 10 lately. InflaRx N.V. (NASDAQ:IFRX) was in 17 hedge funds' portfolios at the end of March. The all time high for this statistic was previously 15. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that IFRX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 7 hedge funds in our database with IFRX holdings at the end of December.

To the average investor there are tons of indicators investors put to use to grade stocks. Two of the most underrated indicators are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the top money managers can outpace their index-focused peers by a superb margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Nathan Fischel DAFNA Capital
Nathan Fischel DAFNA Capital

Nathan Fischel of DAFNA 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. Now we're going to review the fresh hedge fund action surrounding InflaRx N.V. (NASDAQ:IFRX).

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

Heading into the second quarter of 2021, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 143% from the fourth quarter of 2020. By comparison, 9 hedge funds held shares or bullish call options in IFRX a year ago. With hedgies' capital changing hands, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

The largest stake in InflaRx N.V. (NASDAQ:IFRX) was held by Suvretta Capital Management, which reported holding $12.8 million worth of stock at the end of December. It was followed by Great Point Partners with a $8.6 million position. Other investors bullish on the company included OrbiMed Advisors, Sphera Global Healthcare Fund, and Ikarian Capital. In terms of the portfolio weights assigned to each position Great Point Partners allocated the biggest weight to InflaRx N.V. (NASDAQ:IFRX), around 1.77% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, designating 0.56 percent of its 13F equity portfolio to IFRX.

As aggregate interest increased, some big names were breaking ground themselves. Suvretta Capital Management, managed by Aaron Cowen, created the biggest position in InflaRx N.V. (NASDAQ:IFRX). Suvretta Capital Management had $12.8 million invested in the company at the end of the quarter. Jeffrey Jay and David Kroin's Great Point Partners also made a $8.6 million investment in the stock during the quarter. The following funds were also among the new IFRX investors: Doron Breen and Mori Arkin's Sphera Global Healthcare Fund, Nathan Fischel's DAFNA Capital Management, and Benjamin A. Smith's Laurion Capital Management.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as InflaRx N.V. (NASDAQ:IFRX) but similarly valued. We will take a look at Gain Therapeutics, Inc. (NASDAQ:GANX), ImmunoPrecise Antibodies Ltd. (NASDAQ:IPA), First Northwest Bancorp (NASDAQ:FNWB), USA Truck, Inc. (NASDAQ:USAK), Amtech Systems, Inc. (NASDAQ:ASYS), Concord Medical Services Holdings Ltd (NYSE:CCM), and The Eastern Company (NASDAQ:EML). All of these stocks' market caps are closest to IFRX's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GANX,5,13575,5 IPA,1,1472,1 FNWB,2,18108,0 USAK,3,4627,-3 ASYS,12,21388,5 CCM,2,929,1 EML,5,45641,0 Average,4.3,15106,1.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.3 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $43 million in IFRX's case. Amtech Systems, Inc. (NASDAQ:ASYS) is the most popular stock in this table. On the other hand ImmunoPrecise Antibodies Ltd. (NASDAQ:IPA) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks InflaRx N.V. (NASDAQ:IFRX) is more popular among hedge funds. Our overall hedge fund sentiment score for IFRX 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 IFRX wasn't nearly as popular as these 5 stocks and hedge funds that were betting on IFRX were disappointed as the stock returned -31.3% 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.