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Arcturus Therapeutics Holdings Inc. (ARCT): Hedge Funds Sticking Around

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT) and determine whether the smart money was really smart about this stock.

Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 11 hedge funds’ portfolios at the end of the first quarter of 2020. 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 Lindblad Expeditions Holdings Inc (NASDAQ:LIND), ChannelAdvisor Corp (NYSE:ECOM), and Glory Star New Media Group Holdings Limited (NASDAQ:GSMG) to gather more data points. Our calculations also showed that ARCT isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Nathan Fischel DAFNA Capital

Nathan Fischel of DAFNA Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to go over the latest hedge fund action regarding Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT).

What does smart money think about Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT)?

At Q1’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 5 hedge funds held shares or bullish call options in ARCT a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Among these funds, Cormorant Asset Management held the most valuable stake in Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT), which was worth $3.6 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $1.4 million worth of shares. Millennium Management, Highline Capital Management, and DAFNA Capital Management 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 Diametric Capital allocated the biggest weight to Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT), around 0.84% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, dishing out 0.3 percent of its 13F equity portfolio to ARCT.

Judging by the fact that Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT) has experienced falling interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedge funds who were dropping their positions entirely last quarter. Interestingly, Renaissance Technologies dumped the biggest investment of the 750 funds monitored by Insider Monkey, totaling about $0.3 million in stock. David Nguyen and Nancy Oh’s fund, One68 Global Capital, also cut its stock, about $0.2 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT) but similarly valued. We will take a look at Lindblad Expeditions Holdings Inc (NASDAQ:LIND), ChannelAdvisor Corp (NYSE:ECOM), Glory Star New Media Group Holdings Limited (NASDAQ:GSMG), and Ciner Resources LP (NYSE:CINR). This group of stocks’ market values match ARCT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LIND 16 54685 -3
ECOM 11 27999 -1
GSMG 9 1738 -1
CINR 1 1865 -1
Average 9.25 21572 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $10 million in ARCT’s case. Lindblad Expeditions Holdings Inc (NASDAQ:LIND) is the most popular stock in this table. On the other hand Ciner Resources LP (NYSE:CINR) is the least popular one with only 1 bullish hedge fund positions. Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT) is not the most popular stock in this group but hedge fund interest is still above average. 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 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on ARCT as the stock returned 243.9% in Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.