Do Hedge Funds Love Palatin Technologies, Inc. (PTN)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Palatin Technologies, Inc. (NYSE:PTN).

Is Palatin Technologies, Inc. (NYSE:PTN) a buy right now? Money managers are reducing their bets on the stock. The number of long hedge fund bets fell by 2 in recent months. Our calculations also showed that PTN 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 51 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.


Cliff Asness of AQR Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a gander at the key hedge fund action encompassing Palatin Technologies, Inc. (NYSE:PTN).

What have hedge funds been doing with Palatin Technologies, Inc. (NYSE:PTN)?

At Q1’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PTN over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Arrowstreet Capital held the most valuable stake in Palatin Technologies, Inc. (NYSE:PTN), which was worth $0.4 million at the end of the third quarter. On the second spot was Winton Capital Management which amassed $0.3 million worth of shares. Citadel Investment Group, AQR Capital Management, and Two Sigma 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 Winton Capital Management allocated the biggest weight to Palatin Technologies, Inc. (NYSE:PTN), around 0.01% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, setting aside 0.0011 percent of its 13F equity portfolio to PTN.

Judging by the fact that Palatin Technologies, Inc. (NYSE:PTN) has witnessed declining sentiment from the smart money, logic holds that there exists a select few funds who were dropping their full holdings heading into Q4. At the top of the heap, Kevin Kotler’s Broadfin Capital said goodbye to the largest position of the 750 funds watched by Insider Monkey, worth an estimated $0.8 million in stock. Robert B. Gillam’s fund, McKinley Capital Management, also dumped its stock, about $0.1 million worth. These moves are interesting, as total hedge fund interest was cut by 2 funds heading into Q4.

Let’s now review hedge fund activity in other stocks similar to Palatin Technologies, Inc. (NYSE:PTN). These stocks are Axovant Gene Therapies Ltd. (NASDAQ:AXGT), Intevac, Inc. (NASDAQ:IVAC), Aptinyx Inc. (NASDAQ:APTX), and Carrols Restaurant Group, Inc. (NASDAQ:TAST). This group of stocks’ market caps are similar to PTN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AXGT 11 27247 4
IVAC 8 15848 -1
APTX 10 24926 1
TAST 11 14256 -3
Average 10 20569 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $1 million in PTN’s case. Axovant Gene Therapies Ltd. (NASDAQ:AXGT) is the most popular stock in this table. On the other hand Intevac, Inc. (NASDAQ:IVAC) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Palatin Technologies, Inc. (NYSE:PTN) is even less popular than IVAC. Hedge funds clearly dropped the ball on PTN as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on PTN as the stock returned 21.4% so far in the second quarter and outperformed the market by an even larger margin.

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