Do Hedge Funds Love IVERIC bio, Inc. (ISEE)?

In this article we will take a look at whether hedge funds think IVERIC bio, Inc. (NASDAQ:ISEE) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

IVERIC bio, Inc. (NASDAQ:ISEE) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 26 hedge funds’ portfolios at the end of the second quarter of 2021. Our calculations also showed that ISEE isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare ISEE to other stocks including ShotSpotter, Inc. (NASDAQ:SSTI), ZIOPHARM Oncology Inc. (NASDAQ:ZIOP), and Entravision Communications Corporation (NYSE:EVC) to get a better sense of its popularity.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we’re going to go over the fresh hedge fund action encompassing IVERIC bio, Inc. (NASDAQ:ISEE).

Do Hedge Funds Think ISEE Is A Good Stock To Buy Now?

At Q2’s end, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ISEE over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Avoro Capital Advisors (venBio Select Advisor) was the largest shareholder of IVERIC bio, Inc. (NASDAQ:ISEE), with a stake worth $40.5 million reported as of the end of June. Trailing Avoro Capital Advisors (venBio Select Advisor) was Vivo Capital, which amassed a stake valued at $37.6 million. Deerfield Management, Yiheng Capital, and Perceptive Advisors 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 Commodore Capital allocated the biggest weight to IVERIC bio, Inc. (NASDAQ:ISEE), around 3.8% of its 13F portfolio. Acuta Capital Partners is also relatively very bullish on the stock, dishing out 3.15 percent of its 13F equity portfolio to ISEE.

Seeing as IVERIC bio, Inc. (NASDAQ:ISEE) has experienced falling interest from the aggregate hedge fund industry, we can see that there is a sect of hedge funds who were dropping their entire stakes in the second quarter. It’s worth mentioning that Peter A. Wright’s P.A.W. CAPITAL PARTNERS cut the largest position of the 750 funds watched by Insider Monkey, comprising about $0.9 million in stock. Devesh Gandhi’s fund, SilverArc Capital, also dropped its stock, about $0.8 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks similar to IVERIC bio, Inc. (NASDAQ:ISEE). We will take a look at ShotSpotter, Inc. (NASDAQ:SSTI), ZIOPHARM Oncology Inc. (NASDAQ:ZIOP), Entravision Communications Corporation (NYSE:EVC), Thermon Group Holdings, Inc. (NYSE:THR), SOC Telemed, Inc. (NASDAQ:TLMD), Noodles & Co (NASDAQ:NDLS), and Ituran Location and Control Ltd. (NASDAQ:ITRN). All of these stocks’ market caps match ISEE’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.6 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $299 million in ISEE’s case. Noodles & Co (NASDAQ:NDLS) is the most popular stock in this table. On the other hand ShotSpotter, Inc. (NASDAQ:SSTI) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks IVERIC bio, Inc. (NASDAQ:ISEE) is more popular among hedge funds. Our overall hedge fund sentiment score for ISEE is 75.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 24.9% in 2021 through October 15th but still managed to beat the market by 4.5 percentage points. Hedge funds were also right about betting on ISEE as the stock returned 171.5% since the end of June (through 10/15) 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.

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

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