It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Bioamber Inc (NYSE:BIOA).
Bioamber Inc (NYSE:BIOA) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 9 hedge funds’ portfolios at the end of September, same as at the end of June. At the end of this article we will also compare BIOA to other stocks including CUI Global Inc (NASDAQ:CUI), Aware, Inc. (NASDAQ:AWRE), and Mesabi Trust (NYSE:MSB) to get a better sense of its popularity.
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Follow Bioamber Inc. (NYSE:BIOA)
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.
Hedge fund activity in Bioamber Inc (NYSE:BIOA)
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the second quarter of 2016. By comparison, 9 hedge funds also held shares or bullish call options in BIOA heading into this year, as hedge fund sentiment has remained perfectly flat for 4 consecutive quarters, which is extremely rare. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Royce & Associates, led by Chuck Royce, holds the most valuable position in Bioamber Inc (NYSE:BIOA). Royce & Associates has a $3.3 million position in the stock. The second most bullish fund manager is John A. Levin of Levin Capital Strategies, with a $0.7 million position. Other hedge funds and institutional investors that are bullish contain Anand Parekh’s Alyeska Investment Group, Nick Niell’s Arrowgrass Capital Partners, and Renaissance Technologies, one of the largest hedge funds in the world. 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-micro-cap stocks.
We view hedge fund activity in the stock as unfavorable, but in this case there was only a single hedge fund selling its entire position: Ardsley Partners. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Jim Simons’ Renaissance Technologies).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Bioamber Inc (NYSE:BIOA) but similarly valued. These stocks are CUI Global Inc (NASDAQ:CUI), Aware, Inc. (NASDAQ:AWRE), Mesabi Trust (NYSE:MSB), and Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE). All of these stocks’ market caps are closest to BIOA’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $6 million in BIOA’s case. Aware, Inc. (NASDAQ:AWRE) is the most popular stock in this table. On the other hand CUI Global Inc (NASDAQ:CUI) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Bioamber Inc (NYSE:BIOA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.