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Hedge Funds Are Dumping Harvard Bioscience, Inc. (HBIO)

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Harvard Bioscience, Inc. (NASDAQ:HBIO) and determine whether hedge funds had an edge regarding this stock.

Harvard Bioscience, Inc. (NASDAQ:HBIO) investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. Our calculations also showed that HBIO 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.

According to most shareholders, hedge funds are seen as underperforming, outdated financial tools of years past. While there are over 8000 funds in operation at present, Our experts choose to focus on the moguls of this group, approximately 850 funds. These money managers administer most of the smart money’s total capital, and by keeping an eye on their unrivaled equity investments, Insider Monkey has formulated numerous investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Arnaud Ajdler Engine 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 let’s check out the latest hedge fund action regarding Harvard Bioscience, Inc. (NASDAQ:HBIO).

Hedge fund activity in Harvard Bioscience, Inc. (NASDAQ:HBIO)

At the end of the first quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in HBIO a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Is HBIO A Good Stock To Buy?

The largest stake in Harvard Bioscience, Inc. (NASDAQ:HBIO) was held by Engine Capital, which reported holding $10.8 million worth of stock at the end of September. It was followed by Harvey Partners with a $3.8 million position. Other investors bullish on the company included Royce & Associates, Renaissance Technologies, and Millennium Management. In terms of the portfolio weights assigned to each position Engine Capital allocated the biggest weight to Harvard Bioscience, Inc. (NASDAQ:HBIO), around 5.61% of its 13F portfolio. Harvey Partners is also relatively very bullish on the stock, designating 3.42 percent of its 13F equity portfolio to HBIO.

Due to the fact that Harvard Bioscience, Inc. (NASDAQ:HBIO) has witnessed a decline in interest from hedge fund managers, it’s safe to say that there is a sect of fund managers who sold off their full holdings last quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the largest position of all the hedgies monitored by Insider Monkey, valued at an estimated $0.4 million in stock. Peter Algert and Kevin Coldiron’s fund, Algert Coldiron Investors, also dropped its stock, about $0.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 3 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Harvard Bioscience, Inc. (NASDAQ:HBIO) but similarly valued. These stocks are Radcom Ltd. (NASDAQ:RDCM), Applied Genetic Technologies Corp (NASDAQ:AGTC), AgroFresh Solutions Inc (NASDAQ:AGFS), and Cedar Realty Trust Inc (NYSE:CDR). This group of stocks’ market caps match HBIO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RDCM 4 9385 -1
AGTC 12 22216 5
AGFS 4 926 -2
CDR 9 4554 1
Average 7.25 9270 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $23 million in HBIO’s case. Applied Genetic Technologies Corp (NASDAQ:AGTC) is the most popular stock in this table. On the other hand Radcom Ltd. (NASDAQ:RDCM) is the least popular one with only 4 bullish hedge fund positions. Harvard Bioscience, Inc. (NASDAQ:HBIO) is not the most popular stock in this group but hedge fund interest is still above 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 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on HBIO as the stock returned 40.3% in Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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