Do Hedge Funds Love Aimmune Therapeutics Inc (AIMT) ?

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 Aimmune Therapeutics Inc (NASDAQ:AIMT).

Aimmune Therapeutics Inc (NASDAQ:AIMT) was in 20 hedge funds’ portfolios at the end of September. AIMT has experienced an increase in activity from the world’s largest hedge funds lately. There were 13 hedge funds in our database with AIMT holdings at the end of the previous quarter. Our calculations also showed that AIMT 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.

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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

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 go over the key hedge fund action encompassing Aimmune Therapeutics Inc (NASDAQ:AIMT).

How have hedgies been trading Aimmune Therapeutics Inc (NASDAQ:AIMT)?

At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 54% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards AIMT over the last 17 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

The largest stake in Aimmune Therapeutics Inc (NASDAQ:AIMT) was held by Palo Alto Investors, which reported holding $72.7 million worth of stock at the end of September. It was followed by Aisling Capital with a $26 million position. Other investors bullish on the company included Baker Bros. Advisors, Balyasny Asset Management, and Foresite Capital. In terms of the portfolio weights assigned to each position Aisling Capital allocated the biggest weight to Aimmune Therapeutics Inc (NASDAQ:AIMT), around 57.34% of its 13F portfolio. Foresite Capital is also relatively very bullish on the stock, designating 4.89 percent of its 13F equity portfolio to AIMT.

With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Marshall Wace, managed by Paul Marshall and Ian Wace, created the biggest position in Aimmune Therapeutics Inc (NASDAQ:AIMT). Marshall Wace had $8.8 million invested in the company at the end of the quarter. James E. Flynn’s Deerfield Management also initiated a $7.1 million position during the quarter. The other funds with brand new AIMT positions are Israel Englander’s Millennium Management, Dmitry Balyasny’s Balyasny Asset Management, and Noam Gottesman’s GLG Partners.

Let’s now review hedge fund activity in other stocks similar to Aimmune Therapeutics Inc (NASDAQ:AIMT). These stocks are Conduent Incorporated (NYSE:CNDT), Helios Technologies, Inc. (NASDAQ:HLIO), Seacoast Banking Corporation of Florida (NASDAQ:SBCF), and Veritex Holdings Inc (NASDAQ:VBTX). This group of stocks’ market valuations are similar to AIMT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CNDT 30 418046 3
HLIO 3 75356 -1
SBCF 6 22958 0
VBTX 9 85782 1
Average 12 150536 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $151 million. That figure was $193 million in AIMT’s case. Conduent Incorporated (NYSE:CNDT) is the most popular stock in this table. On the other hand Helios Technologies, Inc. (NASDAQ:HLIO) is the least popular one with only 3 bullish hedge fund positions. Aimmune Therapeutics Inc (NASDAQ:AIMT) 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 AIMT as the stock returned 33.3% 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.