Is Fortress Biotech Inc (NASDAQ:FBIO) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Fortress Biotech Inc (NASDAQ:FBIO) has experienced a decrease in activity from the world’s largest hedge funds in recent months. Fortress Biotech Inc (NASDAQ:FBIO) was in 6 hedge funds’ portfolios at the end of March. The all time high for this statistic is 8. Our calculations also showed that FBIO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. 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. With all of this in mind let’s take a glance at the new hedge fund action encompassing Fortress Biotech Inc (NASDAQ:FBIO).
Do Hedge Funds Think FBIO Is A Good Stock To Buy Now?
At the end of March, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FBIO over the last 23 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Among these funds, Nantahala Capital Management held the most valuable stake in Fortress Biotech Inc (NASDAQ:FBIO), which was worth $30.4 million at the end of the fourth quarter. On the second spot was Opaleye Management which amassed $13.7 million worth of shares. Two Sigma Advisors, GLG Partners, and AQR 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 Opaleye Management allocated the biggest weight to Fortress Biotech Inc (NASDAQ:FBIO), around 2.01% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, setting aside 0.89 percent of its 13F equity portfolio to FBIO.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: 683 Capital Partners. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified FBIO as a viable investment and initiated a position in the stock.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Fortress Biotech Inc (NASDAQ:FBIO) but similarly valued. We will take a look at Luna Innovations Incorporated (NASDAQ:LUNA), Crawford & Company (NYSE:CRD), Golden Star Resources Ltd. (NYSE:GSS), Acacia Research Corporation (NASDAQ:ACTG), LiveXLive Media, Inc. (NASDAQ:LIVX), Unity Biotechnology, Inc. (NASDAQ:UBX), and Northwest Pipe Company (NASDAQ:NWPX). This group of stocks’ market values match FBIO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LUNA | 5 | 32963 | -1 |
| CRD | 8 | 77373 | 0 |
| GSS | 7 | 17652 | 0 |
| ACTG | 20 | 33825 | 6 |
| LIVX | 9 | 15556 | 1 |
| UBX | 4 | 1586 | -3 |
| NWPX | 6 | 41730 | -4 |
| Average | 8.4 | 31526 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.4 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $46 million in FBIO’s case. Acacia Research Corporation (NASDAQ:ACTG) is the most popular stock in this table. On the other hand Unity Biotechnology, Inc. (NASDAQ:UBX) is the least popular one with only 4 bullish hedge fund positions. Fortress Biotech Inc (NASDAQ:FBIO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FBIO is 32.8. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately FBIO wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); FBIO investors were disappointed as the stock returned 4.8% since the end of March (through 6/25) 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 in 2021.
Follow Fortress Biotech Inc. (NASDAQ:FBIO)
Follow Fortress Biotech Inc. (NASDAQ:FBIO)
Suggested Articles:
- How to Best Use Insider Monkey To Increase Your Returns
- Billionaire David Tepper’s Top 10 Stocks
- 20 Best Cities To Find A Husband
Disclosure: None. This article was originally published at Insider Monkey.
