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Hedge Funds Are Souring On MEI Pharma Inc (MEIP)

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of MEI Pharma Inc (NASDAQ:MEIP) based on that data.

Is MEI Pharma Inc (NASDAQ:MEIP) the right pick for your portfolio? The best stock pickers are becoming less confident. The number of bullish hedge fund positions fell by 1 lately. Our calculations also showed that MEIP 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). MEIP was in 14 hedge funds’ portfolios at the end of the first quarter of 2020. There were 15 hedge funds in our database with MEIP positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are tons of signals shareholders have at their disposal to value their holdings. Two of the less known signals are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the top money managers can trounce the S&P 500 by a superb margin (see the details here).

Joseph Edelman of Perceptive Advisors

Joseph Edelman of Perceptive Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. 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. Keeping this in mind we’re going to take a peek at the new hedge fund action regarding MEI Pharma Inc (NASDAQ:MEIP).

What does smart money think about MEI Pharma Inc (NASDAQ:MEIP)?

Heading into the second quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MEIP over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Vivo Capital, managed by Albert Cha and Frank Kung, holds the biggest position in MEI Pharma Inc (NASDAQ:MEIP). Vivo Capital has a $15.8 million position in the stock, comprising 1.4% of its 13F portfolio. The second largest stake is held by Biotechnology Value Fund / BVF Inc, managed by Mark Lampert, which holds a $8.1 million position; 0.8% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish encompass Renaissance Technologies, Joseph Edelman’s Perceptive Advisors and Christiana Goh Bardon’s Burrage Capital Management. In terms of the portfolio weights assigned to each position Burrage Capital Management allocated the biggest weight to MEI Pharma Inc (NASDAQ:MEIP), around 4.4% of its 13F portfolio. Vivo Capital is also relatively very bullish on the stock, setting aside 1.43 percent of its 13F equity portfolio to MEIP.

Since MEI Pharma Inc (NASDAQ:MEIP) has witnessed declining sentiment from hedge fund managers, logic holds that there were a few funds who were dropping their positions entirely in the first quarter. At the top of the heap, Arsani William’s Logos Capital dumped the biggest stake of the 750 funds followed by Insider Monkey, comprising close to $2.8 million in stock. Steve Cohen’s fund, Point72 Asset Management, also cut its stock, about $2.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 1 funds in the first quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as MEI Pharma Inc (NASDAQ:MEIP) but similarly valued. We will take a look at Northrim BanCorp, Inc. (NASDAQ:NRIM), Accuray Incorporated (NASDAQ:ARAY), InfuSystem Holdings, Inc. (NYSE:INFU), and Norwood Financial Corp. (NASDAQ:NWFL). This group of stocks’ market valuations are closest to MEIP’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NRIM 9 20633 0
ARAY 15 31226 -1
INFU 7 23271 -2
NWFL 2 1990 0
Average 8.25 19280 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $46 million in MEIP’s case. Accuray Incorporated (NASDAQ:ARAY) is the most popular stock in this table. On the other hand Norwood Financial Corp. (NASDAQ:NWFL) is the least popular one with only 2 bullish hedge fund positions. MEI Pharma Inc (NASDAQ:MEIP) 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 13.3% in 2020 through June 25th but still beat the market by 16.8 percentage points. Hedge funds were also right about betting on MEIP as the stock returned 166.5% in Q2 (through June 25th) 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.