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Did Hedge Funds Drop The Ball On Immunomedics, Inc. (IMMU) ?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Immunomedics, Inc. (NASDAQ:IMMU).

Is Immunomedics, Inc. (NASDAQ:IMMU) going to take off soon? Money managers are getting less bullish. The number of long hedge fund bets shrunk by 1 lately. Our calculations also showed that IMMU isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). IMMU was in 20 hedge funds’ portfolios at the end of September. There were 21 hedge funds in our database with IMMU positions at the end of the previous quarter.
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To most shareholders, hedge funds are seen as slow, outdated financial tools of the past. While there are greater than 8000 funds with their doors open today, Our researchers hone in on the crème de la crème of this group, approximately 750 funds. It is estimated that this group of investors command most of the hedge fund industry’s total asset base, and by paying attention to their finest equity investments, Insider Monkey has uncovered various investment strategies that have historically defeated Mr. Market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum 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 .

Jim Tananbaum - Foresite Capital

Jim Tananbaum of Foresite Capital

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the latest hedge fund action surrounding Immunomedics, Inc. (NASDAQ:IMMU).

Hedge fund activity in Immunomedics, Inc. (NASDAQ:IMMU)

Heading into the fourth quarter of 2019, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the second quarter of 2019. On the other hand, there were a total of 30 hedge funds with a bullish position in IMMU a year ago. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

More specifically, venBio Select Advisor was the largest shareholder of Immunomedics, Inc. (NASDAQ:IMMU), with a stake worth $278.5 million reported as of the end of September. Trailing venBio Select Advisor was Palo Alto Investors, which amassed a stake valued at $82 million. Deerfield Management, Alkeon Capital Management, and Foresite Capital 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 venBio Select Advisor allocated the biggest weight to Immunomedics, Inc. (NASDAQ:IMMU), around 11.62% of its 13F portfolio. Foresite Capital is also relatively very bullish on the stock, setting aside 9.91 percent of its 13F equity portfolio to IMMU.

Since Immunomedics, Inc. (NASDAQ:IMMU) has experienced a decline in interest from hedge fund managers, it’s easy to see that there is a sect of funds that elected to cut their full holdings heading into Q4. Interestingly, Samuel Isaly’s OrbiMed Advisors dumped the biggest position of the “upper crust” of funds monitored by Insider Monkey, worth close to $11.3 million in stock. Ori Hershkovitz’s fund, Nexthera Capital, also cut its stock, about $7.3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 1 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Immunomedics, Inc. (NASDAQ:IMMU) but similarly valued. We will take a look at WW International, Inc. (NASDAQ:WW), Quidel Corporation (NASDAQ:QDEL), International Bancshares Corporation (NASDAQ:IBOC), and Rogers Corporation (NYSE:ROG). This group of stocks’ market values are closest to IMMU’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WW 28 537184 7
QDEL 14 77704 0
IBOC 16 161597 -2
ROG 19 73962 0
Average 19.25 212612 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $213 million. That figure was $537 million in IMMU’s case. WW International, Inc. (NASDAQ:WW) is the most popular stock in this table. On the other hand Quidel Corporation (NASDAQ:QDEL) is the least popular one with only 14 bullish hedge fund positions. Immunomedics, Inc. (NASDAQ:IMMU) is not the most popular stock in this group but hedge fund interest is still above average. 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 IMMU as the stock returned 41.6% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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