The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Fortress Biotech Inc (NASDAQ:FBIO) based on those filings.
Is Fortress Biotech (FBIO) a good stock to buy now? The smart money was in a bullish mood. The number of long hedge fund positions inched up by 2 recently. Fortress Biotech Inc (NASDAQ:FBIO) was in 8 hedge funds' portfolios at the end of September. The all time high for this statistics is 8. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FBIO 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). 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.
David Siegel of Two Sigma 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 15 best blue chip stocks 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. Now we're going to take a look at the new hedge fund action encompassing Fortress Biotech Inc (NASDAQ:FBIO).
What have hedge funds been doing with Fortress Biotech Inc (NASDAQ:FBIO)?
At Q3's end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FBIO 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.
Among these funds, Nantahala Capital Management held the most valuable stake in Fortress Biotech Inc (NASDAQ:FBIO), which was worth $33.2 million at the end of the third quarter. On the second spot was Opaleye Management which amassed $10.3 million worth of shares. Millennium Management, Two Sigma Advisors, and 683 Capital Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Opaleye Management allocated the biggest weight to Fortress Biotech Inc (NASDAQ:FBIO), around 2.01% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, setting aside 1.02 percent of its 13F equity portfolio to FBIO.
Now, specific money managers have jumped into Fortress Biotech Inc (NASDAQ:FBIO) headfirst. GLG Partners, managed by Noam Gottesman, established the largest position in Fortress Biotech Inc (NASDAQ:FBIO). GLG Partners had $0.3 million invested in the company at the end of the quarter. Cliff Asness's AQR Capital Management also made a $0.3 million investment in the stock during the quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Fortress Biotech Inc (NASDAQ:FBIO) but similarly valued. These stocks are Bluegreen Vacations Corporation (NYSE:BXG), Cardiff Oncology, Inc. (NASDAQ:CRDF), ShotSpotter, Inc. (NASDAQ:SSTI), Waitr Holdings Inc. (NASDAQ:WTRH), iBio, Inc. (NYSE:IBIO), The First of Long Island Corporation (NASDAQ:FLIC), and Hoegh LNG Partners LP (NYSE:HMLP). All of these stocks' market caps match FBIO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BXG,5,1706,-3 CRDF,17,113568,10 SSTI,10,27169,3 WTRH,13,62868,-4 IBIO,3,939,1 FLIC,10,22272,-1 HMLP,5,12459,0 Average,9,34426,0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $49 million in FBIO's case. Cardiff Oncology, Inc. (NASDAQ:CRDF) is the most popular stock in this table. On the other hand iBio, Inc. (NYSE:IBIO) is the least popular one with only 3 bullish hedge fund positions. Fortress Biotech Inc (NASDAQ:FBIO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FBIO is 54.9. 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 31.6% in 2020 through December 2nd and surpassed the market again by 16 percentage points. Unfortunately FBIO wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); FBIO investors were disappointed as the stock returned -30.7% since the end of September (through 12/2) 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.