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Abeona Therapeutics Inc (ABEO): Hedge Funds Taking Some Chips Off The Table

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Abeona Therapeutics Inc (NASDAQ:ABEO) and determine whether hedge funds had an edge regarding this stock.

Is Abeona Therapeutics Inc (NASDAQ:ABEO) an exceptional investment today? Prominent investors were becoming less hopeful. The number of bullish hedge fund bets decreased by 1 lately. Abeona Therapeutics Inc (NASDAQ:ABEO) was in 18 hedge funds’ portfolios at the end of June. The all time high for this statistics is 22. Our calculations also showed that ABEO isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

At the moment there are tons of formulas investors put to use to analyze stocks. A duo of the less known formulas are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can beat the S&P 500 by a very impressive margin (see the details here).

Felix Baker - Baker Bros.

Felix Baker of Baker Bros.

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 are checking out this junior gold mining stock and 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 to get excerpts of these letters in your inbox. Now we’re going to take a glance at the recent hedge fund action encompassing Abeona Therapeutics Inc (NASDAQ:ABEO).

How are hedge funds trading Abeona Therapeutics Inc (NASDAQ:ABEO)?

At second quarter’s end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ABEO over the last 20 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Great Point Partners, managed by Jeffrey Jay and David Kroin, holds the biggest position in Abeona Therapeutics Inc (NASDAQ:ABEO). Great Point Partners has a $21 million position in the stock, comprising 1.7% of its 13F portfolio. The second largest stake is held by Adage Capital Management, led by Phill Gross and Robert Atchinson, holding a $16 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions include Fred Knoll’s Knoll Capital Management, Israel Englander’s Millennium Management and Julian Baker and Felix Baker’s Baker Bros. Advisors. In terms of the portfolio weights assigned to each position Knoll Capital Management allocated the biggest weight to Abeona Therapeutics Inc (NASDAQ:ABEO), around 4.71% of its 13F portfolio. Great Point Partners is also relatively very bullish on the stock, designating 1.68 percent of its 13F equity portfolio to ABEO.

Because Abeona Therapeutics Inc (NASDAQ:ABEO) has faced bearish sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of money managers who sold off their full holdings in the second quarter. Interestingly, Joseph Edelman’s Perceptive Advisors dumped the biggest position of all the hedgies followed by Insider Monkey, worth an estimated $3.1 million in stock, and Efrem Kamen’s Pura Vida Investments was right behind this move, as the fund dropped about $0.4 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds in the second quarter.

Let’s now review hedge fund activity in other stocks similar to Abeona Therapeutics Inc (NASDAQ:ABEO). We will take a look at Nam Tai Property Inc (NYSE:NTP), Oasis Petroleum Inc. (NASDAQ:OAS), Teekay Corporation (NYSE:TK), Capital Southwest Corporation (NASDAQ:CSWC), Agile Therapeutics Inc (NASDAQ:AGRX), Titan Machinery Inc. (NASDAQ:TITN), and Greenlight Capital Re, Ltd. (NASDAQ:GLRE). This group of stocks’ market values are closest to ABEO’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NTP 6 43201 0
OAS 17 22024 4
TK 14 13255 1
CSWC 8 10289 1
AGRX 10 49797 -5
TITN 9 15112 1
GLRE 6 1165 -1
Average 10 22120 0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $74 million in ABEO’s case. Oasis Petroleum Inc. (NASDAQ:OAS) is the most popular stock in this table. On the other hand Nam Tai Property Inc (NYSE:NTP) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Abeona Therapeutics Inc (NASDAQ:ABEO) is more popular among hedge funds. Our overall hedge fund sentiment score for ABEO is 78.5. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. Unfortunately ABEO wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ABEO were disappointed as the stock returned -65.1% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.