The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded KalVista Pharmaceuticals, Inc. (NASDAQ:KALV) based on those filings.
KalVista Pharmaceuticals, Inc. (NASDAQ:KALV) investors should pay attention to an increase in support from the world’s most elite money managers recently. KALV was in 18 hedge funds’ portfolios at the end of March. There were 14 hedge funds in our database with KALV holdings at the end of the previous quarter. Our calculations also showed that KALV 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.
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. With all of this in mind we’re going to take a look at the new hedge fund action surrounding KalVista Pharmaceuticals, Inc. (NASDAQ:KALV).
How have hedgies been trading KalVista Pharmaceuticals, Inc. (NASDAQ:KALV)?
At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from one quarter earlier. On the other hand, there were a total of 19 hedge funds with a bullish position in KALV a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
More specifically, Vivo Capital was the largest shareholder of KalVista Pharmaceuticals, Inc. (NASDAQ:KALV), with a stake worth $11.3 million reported as of the end of September. Trailing Vivo Capital was Ikarian Capital, which amassed a stake valued at $7.2 million. Polar Capital, OrbiMed Advisors, and Adage 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 Vivo Capital allocated the biggest weight to KalVista Pharmaceuticals, Inc. (NASDAQ:KALV), around 1.02% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, setting aside 0.75 percent of its 13F equity portfolio to KALV.
Now, specific money managers were breaking ground themselves. Sphera Global Healthcare Fund, managed by Doron Breen and Mori Arkin, initiated the most outsized position in KalVista Pharmaceuticals, Inc. (NASDAQ:KALV). Sphera Global Healthcare Fund had $1.8 million invested in the company at the end of the quarter. James A. Silverman’s Opaleye Management also initiated a $1.7 million position during the quarter. The other funds with new positions in the stock are Aaron Cowen’s Suvretta Capital Management, Ken Griffin’s Citadel Investment Group, and Renaissance Technologies.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as KalVista Pharmaceuticals, Inc. (NASDAQ:KALV) but similarly valued. These stocks are Soliton, Inc. (NASDAQ:SOLY), Silvercrest Asset Management Group Inc (NASDAQ:SAMG), Quad/Graphics, Inc. (NYSE:QUAD), and Steel Partners Holdings LP (NYSE:SPLP). This group of stocks’ market caps resemble KALV’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $41 million in KALV’s case. Quad/Graphics, Inc. (NYSE:QUAD) is the most popular stock in this table. On the other hand Soliton, Inc. (NASDAQ:SOLY) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks KalVista Pharmaceuticals, Inc. (NASDAQ:KALV) 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 13.4% in 2020 through June 22nd but still managed to beat the market by 15.9 percentage points. Hedge funds were also right about betting on KALV as the stock returned 42.4% so far in Q2 (through June 22nd) 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.
Disclosure: None. This article was originally published at Insider Monkey.