Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Aptose Biosciences Inc (NASDAQ:APTO)? The smart money sentiment can provide an answer to this question.
Is Aptose Biosciences Inc (NASDAQ:APTO) a buy, sell, or hold? The best stock pickers were betting on the stock. The number of long hedge fund positions inched up by 2 recently. Aptose Biosciences Inc (NASDAQ:APTO) was in 23 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 21. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that APTO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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 take a look at the fresh hedge fund action regarding Aptose Biosciences Inc (NASDAQ:APTO).
Do Hedge Funds Think APTO Is A Good Stock To Buy Now?
At the end of March, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in APTO a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, OrbiMed Advisors held the most valuable stake in Aptose Biosciences Inc (NASDAQ:APTO), which was worth $48 million at the end of the fourth quarter. On the second spot was Nantahala Capital Management which amassed $46.2 million worth of shares. Cormorant Asset Management, Woodline Partners, and Polar Capital 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 P.A.W. CAPITAL PARTNERS allocated the biggest weight to Aptose Biosciences Inc (NASDAQ:APTO), around 3.63% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, designating 1.35 percent of its 13F equity portfolio to APTO.
Consequently, key money managers have been driving this bullishness. Cormorant Asset Management, managed by Bihua Chen, initiated the biggest position in Aptose Biosciences Inc (NASDAQ:APTO). Cormorant Asset Management had $23.9 million invested in the company at the end of the quarter. Devesh Gandhi’s SilverArc Capital also made a $0.6 million investment in the stock during the quarter. The other funds with brand new APTO positions are Kamran Moghtaderi’s Eversept Partners and Michael Castor’s Sio Capital.
Let’s also examine hedge fund activity in other stocks similar to Aptose Biosciences Inc (NASDAQ:APTO). We will take a look at Electrameccanica Vehicles Corp. (NASDAQ:SOLO), AMMO, Inc. (NASDAQ:POWW), Lizhi Inc. (NASDAQ:LIZI), iCAD Inc (NASDAQ:ICAD), First Community Bancshares Inc (NASDAQ:FCBC), Mercantile Bank Corp. (NASDAQ:MBWM), and AVROBIO, Inc. (NASDAQ:AVRO). This group of stocks’ market values resemble APTO’s market value.
|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 7.6 hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $173 million in APTO’s case. iCAD Inc (NASDAQ:ICAD) is the most popular stock in this table. On the other hand Lizhi Inc. (NASDAQ:LIZI) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Aptose Biosciences Inc (NASDAQ:APTO) is more popular among hedge funds. Our overall hedge fund sentiment score for APTO is 87. 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 gained 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Unfortunately APTO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on APTO were disappointed as the stock returned -52.2% since the end of the first quarter (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.