DBV Technologies SA (DBVT) Fell Out Of Favor With Hedge Funds

In this article you are going to find out whether hedge funds think DBV Technologies SA (NASDAQ:DBVT) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

DBV Technologies SA (NASDAQ:DBVT) was in 5 hedge funds’ portfolios at the end of September. The all time high for this statistics is 23. DBVT has experienced a decrease in enthusiasm from smart money lately. There were 8 hedge funds in our database with DBVT holdings at the end of June. Our calculations also showed that DBVT 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Joseph Edelman of Perceptive AdvisorsJoe Edelman

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. With all of this in mind let’s take a glance at the key hedge fund action regarding DBV Technologies SA (NASDAQ:DBVT).

How are hedge funds trading DBV Technologies SA (NASDAQ:DBVT)?

At third quarter’s end, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -38% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DBVT over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is DBVT A Good Stock To Buy?

More specifically, Baker Bros. Advisors was the largest shareholder of DBV Technologies SA (NASDAQ:DBVT), with a stake worth $25.3 million reported as of the end of September. Trailing Baker Bros. Advisors was Perceptive Advisors, which amassed a stake valued at $11.8 million. Millennium Management, Ikarian Capital, and Marshall Wace LLP 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 Perceptive Advisors allocated the biggest weight to DBV Technologies SA (NASDAQ:DBVT), around 0.17% of its 13F portfolio. Baker Bros. Advisors is also relatively very bullish on the stock, earmarking 0.1 percent of its 13F equity portfolio to DBVT.

Since DBV Technologies SA (NASDAQ:DBVT) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there is a sect of hedgies that elected to cut their positions entirely in the third quarter. It’s worth mentioning that James E. Flynn’s Deerfield Management said goodbye to the largest stake of all the hedgies monitored by Insider Monkey, totaling an estimated $22.6 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dumped about $2.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 3 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as DBV Technologies SA (NASDAQ:DBVT) but similarly valued. We will take a look at Calumet Specialty Products Partners, L.P (NASDAQ:CLMT), Altisource Portfolio Solutions S.A. (NASDAQ:ASPS), Plymouth Industrial REIT, Inc. (NYSE:PLYM), Baytex Energy Corp (NYSE:BTE), Tortoise Energy Infrastructure Corporation (NYSE:TYG), Farmland Partners Inc (NYSE:FPI), and Vista Oil & Gas, S.A.B. de C.V. (NYSE:VIST). This group of stocks’ market values are closest to DBVT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CLMT 3 6726 0
ASPS 6 11283 -2
PLYM 14 35524 7
BTE 9 7132 3
TYG 2 1839 1
FPI 8 5154 0
VIST 9 31931 4
Average 7.3 14227 1.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.3 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $39 million in DBVT’s case. Plymouth Industrial REIT, Inc. (NYSE:PLYM) is the most popular stock in this table. On the other hand Tortoise Energy Infrastructure Corporation (NYSE:TYG) is the least popular one with only 2 bullish hedge fund positions. DBV Technologies SA (NASDAQ:DBVT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DBVT is 21. 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 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 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on DBVT as the stock returned 47.4% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.

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