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Did Hedge Funds Make The Right Call On Pieris Pharmaceuticals, Inc. (PIRS) ?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) based on that data and determine whether they were really smart about the stock.

Is Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) a worthy investment today? Investors who are in the know were taking a bearish view. The number of long hedge fund bets were trimmed by 2 lately. Our calculations also showed that PIRS 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.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.

RENAISSANCE TECHNOLOGIES

Jim Simons Founder of Renaissance Technologies

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in the world 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now let’s go over the key hedge fund action regarding Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS).

What does smart money think about Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS)?

Heading into the second quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the fourth quarter of 2019. By comparison, 15 hedge funds held shares or bullish call options in PIRS a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

The largest stake in Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) was held by Biotechnology Value Fund / BVF Inc, which reported holding $13.4 million worth of stock at the end of September. It was followed by Aquilo Capital Management with a $12.7 million position. Other investors bullish on the company included Renaissance Technologies, Corriente Advisors, and Samsara BioCapital. In terms of the portfolio weights assigned to each position Aquilo Capital Management allocated the biggest weight to Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS), around 4.95% of its 13F portfolio. Corriente Advisors is also relatively very bullish on the stock, earmarking 4.39 percent of its 13F equity portfolio to PIRS.

Judging by the fact that Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) has witnessed falling interest from hedge fund managers, it’s safe to say that there is a sect of funds who sold off their entire stakes last quarter. It’s worth mentioning that Parvinder Thiara’s Athanor Capital dropped the largest stake of all the hedgies monitored by Insider Monkey, worth about $0.2 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund sold off about $0.2 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 2 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS). These stocks are Lakeland Industries, Inc. (NASDAQ:LAKE), Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK), Safe Bulkers, Inc. (NYSE:SB), and Lineage Cell Therapeutics, Inc. (NYSE:LCTX). This group of stocks’ market valuations resemble PIRS’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LAKE 9 18007 5
PEBK 2 5139 0
SB 6 6525 -1
LCTX 6 28804 1
Average 5.75 14619 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $48 million in PIRS’s case. Lakeland Industries, Inc. (NASDAQ:LAKE) is the most popular stock in this table. On the other hand Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) is more popular among hedge funds. 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 18.6% in 2020 through July 27th and still beat the market by 17.1 percentage points. Unfortunately PIRS wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PIRS were disappointed as the stock returned 21.9% since the end of the first quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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