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. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Exicure, Inc. (NASDAQ:XCUR) and determine whether the smart money was really smart about this stock.
Hedge fund interest in Exicure, Inc. (NASDAQ:XCUR) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare XCUR to other stocks including The Community Financial Corporation (NASDAQ:TCFC), Saratoga Investment Corp (NYSE:SAR), and Hamilton Beach Brands Holding Company (NYSE:HBB) to get a better sense of its popularity.
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.
Oleg Nodelman of EcoR1 Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to review the new hedge fund action encompassing Exicure, Inc. (NASDAQ:XCUR).
How have hedgies been trading Exicure, Inc. (NASDAQ:XCUR)?
At the end of the first quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards XCUR over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Tybourne Capital Management held the most valuable stake in Exicure, Inc. (NASDAQ:XCUR), which was worth $10.9 million at the end of the third quarter. On the second spot was Sphera Global Healthcare Fund which amassed $4.9 million worth of shares. EcoR1 Capital, Granite Point Capital, and Knoll Capital Management 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 Knoll Capital Management allocated the biggest weight to Exicure, Inc. (NASDAQ:XCUR), around 1.78% of its 13F portfolio. Granite Point Capital is also relatively very bullish on the stock, designating 1.07 percent of its 13F equity portfolio to XCUR.
Due to the fact that Exicure, Inc. (NASDAQ:XCUR) has experienced falling interest from hedge fund managers, it’s safe to say that there were a few fund managers that slashed their positions entirely heading into Q4. It’s worth mentioning that Kevin Kotler’s Broadfin Capital dropped the biggest stake of the “upper crust” of funds followed by Insider Monkey, valued at an estimated $7.7 million in stock, and Michael Castor’s Sio Capital was right behind this move, as the fund dumped about $1.3 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks similar to Exicure, Inc. (NASDAQ:XCUR). We will take a look at The Community Financial Corporation (NASDAQ:TCFC), Saratoga Investment Corp (NYSE:SAR), Hamilton Beach Brands Holding Company (NYSE:HBB), and Republic First Bancorp, Inc. (NASDAQ:FRBK). This group of stocks’ market valuations resemble XCUR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TCFC | 3 | 15041 | 0 |
| SAR | 5 | 2482 | -1 |
| HBB | 7 | 1843 | 1 |
| FRBK | 7 | 3468 | 1 |
| Average | 5.5 | 5709 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $26 million in XCUR’s case. Hamilton Beach Brands Holding Company (NYSE:HBB) is the most popular stock in this table. On the other hand The Community Financial Corporation (NASDAQ:TCFC) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Exicure, Inc. (NASDAQ:XCUR) 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 returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on XCUR as the stock returned 64.9% in Q2 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.