It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Aimmune Therapeutics Inc (NASDAQ:AIMT) .
Aimmune Therapeutics Inc (NASDAQ:AIMT) investors should pay attention to a decrease in support from the world’s most successful money managers recently. AIMT was in 9 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with AIMT positions at the end of the previous quarter. 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 Dime Community Bancshares, Inc. (NASDAQ:DCOM), Richmont Mines Inc. (USA) (NYSEMKT:RIC), and Cass Information Systems (NASDAQ:CASS) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Now, we’re going to take a look at the key action regarding Aimmune Therapeutics Inc (NASDAQ:AIMT).
How are hedge funds trading Aimmune Therapeutics Inc (NASDAQ:AIMT)?
Heading into the fourth quarter of 2016, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 18% from the second quarter of 2016. By comparison, 7 hedge funds held shares or bullish call options in AIMT heading into this year. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Dennis Purcell’s Aisling Capital has the biggest position in Aimmune Therapeutics Inc (NASDAQ:AIMT), worth close to $44.9 million, amounting to 9.2% of its total 13F portfolio. On Aisling Capital’s heels is Peter Kolchinsky’s RA Capital Management holding a $19.4 million position; 2% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism include Phill Gross and Robert Atchinson’s Adage Capital Management, Julian Baker and Felix Baker’s Baker Bros. Advisors and William Leland Edwards’ Palo Alto Investors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Judging by the fact that Aimmune Therapeutics Inc (NASDAQ:AIMT) has sustained a declining sentiment from the smart money, we can see that there were a few money managers who were dropping their entire stakes heading into Q4. Interestingly, D E Shaw, one of the biggest hedge funds in the world, dropped the largest investment of the “upper crust” of funds followed by Insider Monkey, totaling about $0.2 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also said goodbye to its stock, about $0.1 million worth.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Aimmune Therapeutics Inc (NASDAQ:AIMT) but similarly valued. We will take a look at Dime Community Bancshares, Inc. (NASDAQ:DCOM), Richmont Mines Inc. (USA) (NYSEMKT:RIC), Cass Information Systems (NASDAQ:CASS), and Diamond Hill Investment Group, Inc. (NASDAQ:DHIL). This group of stocks’ market valuations match AIMT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DCOM | 8 | 33018 | 0 |
| RIC | 9 | 74547 | 0 |
| CASS | 5 | 8387 | -1 |
| DHIL | 5 | 63669 | -1 |
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $103 million in AIMT’s case. Richmont Mines Inc. (USA) (NYSEAMEX:RIC) is the most popular stock in this table. On the other hand Cass Information Systems (NASDAQ:CASS) is the least popular one with only 5 bullish hedge fund positions. Aimmune Therapeutics Inc (NASDAQ:AIMT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard RIC might be a better candidate to consider taking a long position in.
Disclosure: None
