Hedge Funds Are Selling Apellis Pharmaceuticals, Inc. (APLS)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) based on that data.

Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) has seen a decrease in hedge fund sentiment in recent months. Our calculations also showed that APLS 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.

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.

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this oneWe 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 take a peek at the recent hedge fund action regarding Apellis Pharmaceuticals, Inc. (NASDAQ:APLS).

How have hedgies been trading Apellis Pharmaceuticals, Inc. (NASDAQ:APLS)?

Heading into the second quarter of 2020, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards APLS over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is APLS A Good Stock To Buy?

More specifically, Hillhouse Capital Management was the largest shareholder of Apellis Pharmaceuticals, Inc. (NASDAQ:APLS), with a stake worth $134.7 million reported as of the end of September. Trailing Hillhouse Capital Management was Cormorant Asset Management, which amassed a stake valued at $60.7 million. Farallon Capital, Millennium Management, and Eversept Partners 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 Eversept Partners allocated the biggest weight to Apellis Pharmaceuticals, Inc. (NASDAQ:APLS), around 6.1% of its 13F portfolio. Cormorant Asset Management is also relatively very bullish on the stock, earmarking 2.82 percent of its 13F equity portfolio to APLS.

Since Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) has witnessed bearish sentiment from the smart money, logic holds that there was a specific group of hedge funds who were dropping their positions entirely in the first quarter. Interestingly, Arsani William’s Logos Capital dumped the biggest stake of all the hedgies followed by Insider Monkey, totaling about $18 million in stock, and Albert Cha and Frank Kung’s Vivo Capital was right behind this move, as the fund said goodbye to about $11.7 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds in the first quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) but similarly valued. These stocks are Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), Home Bancshares Inc (NASDAQ:HOMB), National Beverage Corp. (NASDAQ:FIZZ), and Stepan Company (NYSE:SCL). This group of stocks’ market values match APLS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CBRL 23 101131 -1
HOMB 20 15614 8
FIZZ 20 202468 -1
SCL 10 48020 -3
Average 18.25 91808 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $92 million. That figure was $456 million in APLS’s case. Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) is the most popular stock in this table. On the other hand Stepan Company (NYSE:SCL) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) 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 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on APLS as the stock returned 25.8% so far in Q2 (through the end of May) 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.