At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Aquestive Therapeutics, Inc. (NASDAQ:AQST).
Is Aquestive Therapeutics, Inc. (NASDAQ:AQST) a buy here? The smart money is becoming less confident. The number of bullish hedge fund bets dropped by 6 lately. Our calculations also showed that AQST 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a 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, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. 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. With all of this in mind let’s check out the latest hedge fund action encompassing Aquestive Therapeutics, Inc. (NASDAQ:AQST).
What have hedge funds been doing with Aquestive Therapeutics, Inc. (NASDAQ:AQST)?
At Q1’s end, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of -40% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AQST over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Perceptive Advisors, managed by Joseph Edelman, holds the number one position in Aquestive Therapeutics, Inc. (NASDAQ:AQST). Perceptive Advisors has a $3.8 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by DG Capital Management, led by Dov Gertzulin, holding a $1.2 million position; the fund has 1.9% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions include Kamran Moghtaderi’s Eversept Partners, Renaissance Technologies and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position DG Capital Management allocated the biggest weight to Aquestive Therapeutics, Inc. (NASDAQ:AQST), around 1.89% of its 13F portfolio. Eversept Partners is also relatively very bullish on the stock, designating 0.17 percent of its 13F equity portfolio to AQST.
Due to the fact that Aquestive Therapeutics, Inc. (NASDAQ:AQST) has faced bearish sentiment from hedge fund managers, we can see that there was a specific group of fund managers that decided to sell off their positions entirely heading into Q4. Interestingly, James A. Silverman’s Opaleye Management dumped the largest stake of all the hedgies followed by Insider Monkey, valued at about $4.3 million in stock, and Leonard A. Potter’s Wildcat Capital Management was right behind this move, as the fund dumped about $2.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Aquestive Therapeutics, Inc. (NASDAQ:AQST) but similarly valued. We will take a look at Cyclerion Therapeutics, Inc. (NASDAQ:CYCN), Aldeyra Therapeutics Inc (NASDAQ:ALDX), Centennial Resource Development, Inc. (NASDAQ:CDEV), and Delta Apparel, Inc. (NYSE:DLA). This group of stocks’ market caps resemble AQST’s market cap.
|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 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $8 million in AQST’s case. Centennial Resource Development, Inc. (NASDAQ:CDEV) is the most popular stock in this table. On the other hand Delta Apparel, Inc. (NYSE:DLA) is the least popular one with only 4 bullish hedge fund positions. Aquestive Therapeutics, Inc. (NASDAQ:AQST) is not the least popular stock in this group but hedge fund interest is still below 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 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on AQST as the stock returned 147% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.