Where Do Hedge Funds Stand On T2 Biosystems Inc (TTOO)?
Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about T2 Biosystems Inc (NASDAQ:TTOO) in this article.
T2 Biosystems Inc (NASDAQ:TTOO) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that TTOO 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). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Veritiv Corp (NYSE:VRTV), WhiteHorse Finance, Inc. (NASDAQ:WHF), and VIA optronics AG (NYSE:VIAO) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
John Levin of Levin Capital Strategies
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. With all of this in mind let's take a glance at the recent hedge fund action surrounding T2 Biosystems Inc (NASDAQ:TTOO).
Hedge fund activity in T2 Biosystems Inc (NASDAQ:TTOO)
At third quarter's end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TTOO over the last 21 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Israel Englander's Millennium Management has the number one position in T2 Biosystems Inc (NASDAQ:TTOO), worth close to $0.3 million, accounting for less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is John A. Levin of Levin Capital Strategies, with a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that hold long positions contain Ken Griffin's Citadel Investment Group, Greg Eisner's Engineers Gate Manager and . In terms of the portfolio weights assigned to each position Levin Capital Strategies allocated the biggest weight to T2 Biosystems Inc (NASDAQ:TTOO), around 0.02% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, designating 0.0023 percent of its 13F equity portfolio to TTOO.
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 also examine hedge fund activity in other stocks - not necessarily in the same industry as T2 Biosystems Inc (NASDAQ:TTOO) but similarly valued. We will take a look at Veritiv Corp (NYSE:VRTV), WhiteHorse Finance, Inc. (NASDAQ:WHF), VIA optronics AG (NYSE:VIAO), Civista Bancshares, Inc. (NASDAQ:CIVB), Alpha Pro Tech, Ltd. (NYSE:APT), AquaBounty Technologies, Inc. (NASDAQ:AQB), and ESSA Pharma Inc. (NASDAQ:EPIX). All of these stocks' market caps resemble TTOO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VRTV,11,52963,1 WHF,3,1895,0 VIAO,10,8592,10 CIVB,11,7096,-1 APT,6,24429,-2 AQB,4,1751,0 EPIX,16,72217,9 Average,8.7,24135,2.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.7 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $1 million in TTOO's case. ESSA Pharma Inc. (NASDAQ:EPIX) is the most popular stock in this table. On the other hand WhiteHorse Finance, Inc. (NASDAQ:WHF) is the least popular one with only 3 bullish hedge fund positions. T2 Biosystems Inc (NASDAQ:TTOO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TTOO is 15.9. 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 negative signal and 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 30.7% in 2020 through November 27th and surpassed the market again by 16.1 percentage points. Unfortunately TTOO wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TTOO investors were disappointed as the stock returned -16.9% since the end of September (through 11/27) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
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