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Hedge Funds Are Betting On Emergent Biosolutions Inc (EBS)

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 Emergent Biosolutions Inc (NYSE:EBS).

Emergent Biosolutions Inc (NYSE:EBS) investors should be aware of an increase in support from the world’s most elite money managers lately. Our calculations also showed that EBS 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Sahm Adrangi Kerrisdale Capital

Sahm Adrangi of Kerrisdale Capital

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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. Now we’re going to analyze the recent hedge fund action encompassing Emergent Biosolutions Inc (NYSE:EBS).

What have hedge funds been doing with Emergent Biosolutions Inc (NYSE:EBS)?

At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 42% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in EBS over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Emergent Biosolutions Inc (NYSE:EBS) was held by Renaissance Technologies, which reported holding $36 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $33.9 million position. Other investors bullish on the company included Royce & Associates, Citadel Investment Group, and Portolan Capital Management. In terms of the portfolio weights assigned to each position Portolan Capital Management allocated the biggest weight to Emergent Biosolutions Inc (NYSE:EBS), around 1.14% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, earmarking 0.46 percent of its 13F equity portfolio to EBS.

Consequently, key hedge funds were breaking ground themselves. Portolan Capital Management, managed by George McCabe, initiated the most valuable position in Emergent Biosolutions Inc (NYSE:EBS). Portolan Capital Management had $7.6 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $3.2 million position during the quarter. The other funds with brand new EBS positions are Sahm Adrangi’s Kerrisdale Capital, Noam Gottesman’s GLG Partners, and Minhua Zhang’s Weld Capital Management.

Let’s go over hedge fund activity in other stocks similar to Emergent Biosolutions Inc (NYSE:EBS). These stocks are NIO Limited (NYSE:NIO), frontdoor, inc. (NASDAQ:FTDR), Polaris Inc. (NYSE:PII), and Selective Insurance Group, Inc. (NASDAQ:SIGI). This group of stocks’ market values are closest to EBS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NIO 16 29111 0
FTDR 33 552969 -4
PII 24 157435 -2
SIGI 15 70570 -10
Average 22 202521 -4

View table here if you experience formatting issues.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $203 million. That figure was $114 million in EBS’s case. frontdoor, inc. (NASDAQ:FTDR) is the most popular stock in this table. On the other hand Selective Insurance Group, Inc. (NASDAQ:SIGI) is the least popular one with only 15 bullish hedge fund positions. Emergent Biosolutions Inc (NYSE:EBS) is not the least popular stock in this group but hedge fund interest is still below average. 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 13.4% in 2020 through June 22nd but beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on EBS, though not to the same extent, as the stock returned 26.3% during the second quarter and outperformed the market.

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