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Did Hedge Funds Drop The Ball On Abeona Therapeutics Inc (ABEO)?

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. 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 Abeona Therapeutics Inc (NASDAQ:ABEO).

Abeona Therapeutics Inc (NASDAQ:ABEO) investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. Our calculations also showed that ABEO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To most investors, hedge funds are perceived as unimportant, old financial vehicles of years past. While there are over 8000 funds in operation at the moment, Our experts hone in on the top tier of this club, about 750 funds. These hedge fund managers handle bulk of all hedge funds’ total asset base, and by watching their first-class picks, Insider Monkey has come up with numerous investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Felix Baker - Baker Bros.

Felix Baker of Baker Bros.

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s view the new hedge fund action surrounding Abeona Therapeutics Inc (NASDAQ:ABEO).

How have hedgies been trading Abeona Therapeutics Inc (NASDAQ:ABEO)?

At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -12% from one quarter earlier. On the other hand, there were a total of 22 hedge funds with a bullish position in ABEO a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Abeona Therapeutics Inc (NASDAQ:ABEO) was held by Millennium Management, which reported holding $8 million worth of stock at the end of September. It was followed by Great Point Partners with a $7.3 million position. Other investors bullish on the company included Adage Capital Management, Knoll Capital Management, and 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 4.88% of its 13F portfolio. Great Point Partners is also relatively very bullish on the stock, setting aside 0.67 percent of its 13F equity portfolio to ABEO.

Due to the fact that Abeona Therapeutics Inc (NASDAQ:ABEO) has faced a decline in interest from the smart money, it’s safe to say that there was a specific group of hedge funds that elected to cut their full holdings last quarter. Interestingly, Peter Muller’s PDT Partners dumped the largest position of all the hedgies tracked by Insider Monkey, comprising close to $0.4 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also said goodbye to its stock, about $0.1 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Abeona Therapeutics Inc (NASDAQ:ABEO) but similarly valued. These stocks are Kaixin Auto Holdings (NASDAQ:KXIN), Frequency Electronics, Inc. (NASDAQ:FEIM), YRC Worldwide, Inc. (NASDAQ:YRCW), and Blue Apron Holdings, Inc. (NYSE:APRN). All of these stocks’ market caps are closest to ABEO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KXIN 3 203 -1
FEIM 3 11359 0
YRCW 6 6095 -2
APRN 8 14612 3
Average 5 8067 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $33 million in ABEO’s case. Blue Apron Holdings, Inc. (NYSE:APRN) is the most popular stock in this table. On the other hand Kaixin Auto Holdings (NASDAQ:KXIN) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Abeona Therapeutics Inc (NASDAQ:ABEO) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on ABEO as the stock returned 49.1% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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