In this article we will check out the progression of hedge fund sentiment towards Applied Therapeutics, Inc. (NASDAQ:APLT) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Applied Therapeutics, Inc. (NASDAQ:APLT) investors should pay attention to an increase in enthusiasm from smart money in recent months. Our calculations also showed that APLT 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 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. With all of this in mind we’re going to view the latest hedge fund action regarding Applied Therapeutics, Inc. (NASDAQ:APLT).
How have hedgies been trading Applied Therapeutics, Inc. (NASDAQ:APLT)?
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 129% from the fourth quarter of 2019. By comparison, 0 hedge funds held shares or bullish call options in APLT a year ago. 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, Samuel Isaly’s OrbiMed Advisors has the most valuable position in Applied Therapeutics, Inc. (NASDAQ:APLT), worth close to $43.1 million, corresponding to 0.7% of its total 13F portfolio. The second most bullish fund manager is Kris Jenner, Gordon Bussard, Graham McPhail of Rock Springs Capital Management, with a $27.6 million position; 1.1% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish consist of Fred Knoll’s Knoll Capital Management, Panayotis Takis Sparaggis’s Alkeon Capital Management and Richard Driehaus’s Driehaus Capital. In terms of the portfolio weights assigned to each position Knoll Capital Management allocated the biggest weight to Applied Therapeutics, Inc. (NASDAQ:APLT), around 19.72% of its 13F portfolio. Acuta Capital Partners is also relatively very bullish on the stock, dishing out 1.62 percent of its 13F equity portfolio to APLT.
Consequently, key hedge funds were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, established the biggest position in Applied Therapeutics, Inc. (NASDAQ:APLT). Point72 Asset Management had $17.3 million invested in the company at the end of the quarter. James E. Flynn’s Deerfield Management also initiated a $9.1 million position during the quarter. The other funds with brand new APLT positions are Manfred Yu’s Acuta Capital Partners, Israel Englander’s Millennium Management, and Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Applied Therapeutics, Inc. (NASDAQ:APLT) but similarly valued. These stocks are Transportadora de Gas del Sur SA (NYSE:TGS), Passage Bio, Inc. (NASDAQ:PASG), Constellium SE (NYSE:CSTM), and Tilray, Inc. (NASDAQ:TLRY). This group of stocks’ market valuations are closest to APLT’s market valuation.
|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 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $116 million. That figure was $174 million in APLT’s case. Constellium SE (NYSE:CSTM) is the most popular stock in this table. On the other hand Transportadora de Gas del Sur SA (NYSE:TGS) is the least popular one with only 6 bullish hedge fund positions. Applied Therapeutics, Inc. (NASDAQ:APLT) is not the least popular stock in this group but hedge fund interest is still below average. 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 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 and surpassed the market by 16.8 percentage points. Unfortunately APLT wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); APLT investors were disappointed as the stock returned 15.4% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.