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In this article we will analyze whether 180 Degree Capital Corp. (NASDAQ:TURN) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Hedge fund interest in 180 Degree Capital Corp. (NASDAQ:TURN) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that TURN 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). At the end of this article we will also compare TURN to other stocks including Vascular Biogenics Ltd. (NASDAQ:VBLT), Reed's, Inc. (NYSE:REED), and Akarti Therapeutics PLC (NASDAQ:AKTX) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Fred DiSanto of Ancora Advisors
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 10 most profitable companies in the world 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. Keeping this in mind let's check out the latest hedge fund action regarding 180 Degree Capital Corp. (NASDAQ:TURN).
How have hedgies been trading 180 Degree Capital Corp. (NASDAQ:TURN)?
At Q3's end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 2 hedge funds held shares or bullish call options in TURN a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in 180 Degree Capital Corp. (NASDAQ:TURN) was held by Ariel Investments, which reported holding $4.3 million worth of stock at the end of September. It was followed by Ancora Advisors with a $0.8 million position. The only other hedge fund that is bullish on the company was Citadel Investment Group.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as 180 Degree Capital Corp. (NASDAQ:TURN) but similarly valued. We will take a look at Vascular Biogenics Ltd. (NASDAQ:VBLT), Reed's, Inc. (NYSE:REED), Akarti Therapeutics PLC (NASDAQ:AKTX), Aware, Inc. (NASDAQ:AWRE), Anixa Biosciences, Inc. (NASDAQ:ANIX), Citius Pharmaceuticals, Inc. (NASDAQ:CTXR), and Crown Crafts, Inc. (NASDAQ:CRWS). This group of stocks' market values resemble TURN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VBLT,1,748,-1 REED,5,2532,-1 AKTX,1,189,-2 AWRE,3,7502,0 ANIX,1,88,0 CTXR,1,92,0 CRWS,7,9216,0 Average,2.7,2910,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.7 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $5 million in TURN's case. Crown Crafts, Inc. (NASDAQ:CRWS) is the most popular stock in this table. On the other hand Vascular Biogenics Ltd. (NASDAQ:VBLT) is the least popular one with only 1 bullish hedge fund positions. 180 Degree Capital Corp. (NASDAQ:TURN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TURN is 51.7. 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 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 28.1% in 2020 through November 23rd and beat the market again by 15.4 percentage points. Unfortunately TURN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TURN were disappointed as the stock returned 5.3% since the end of September (through 11/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.