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Hedge Funds Have Never Been This Bullish On BioDelivery Sciences International, Inc. (BDSI)

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 BioDelivery Sciences International, Inc. (NASDAQ:BDSI) based on that data.

Is BioDelivery Sciences International, Inc. (NASDAQ:BDSI) going to take off soon? The smart money is becoming more confident. The number of long hedge fund bets moved up by 2 in recent months. Our calculations also showed that BDSI 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.

According to most traders, hedge funds are seen as underperforming, old financial tools of yesteryear. While there are greater than 8000 funds trading at the moment, Our researchers look at the masters of this club, approximately 850 funds. Most estimates calculate that this group of people handle most of all hedge funds’ total asset base, and by keeping track of their top picks, Insider Monkey has revealed numerous investment strategies that have historically outrun the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

James Flynn Deerfield Management

James E. Flynn of Deerfield Management

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 stocks recommended/scorned by legendary Bill Miller. We 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 let’s take a look at the latest hedge fund action surrounding BioDelivery Sciences International, Inc. (NASDAQ:BDSI).

Hedge fund activity in BioDelivery Sciences International, Inc. (NASDAQ:BDSI)

At Q1’s end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BDSI 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 BDSI A Good Stock To Buy?

More specifically, Deerfield Management was the largest shareholder of BioDelivery Sciences International, Inc. (NASDAQ:BDSI), with a stake worth $23.4 million reported as of the end of September. Trailing Deerfield Management was Nantahala Capital Management, which amassed a stake valued at $19 million. Rubric Capital Management, Avoro Capital Advisors (venBio Select Advisor), and Adage 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 Stonepine Capital allocated the biggest weight to BioDelivery Sciences International, Inc. (NASDAQ:BDSI), around 3.03% of its 13F portfolio. Rubric Capital Management is also relatively very bullish on the stock, designating 2.26 percent of its 13F equity portfolio to BDSI.

Consequently, key money managers have jumped into BioDelivery Sciences International, Inc. (NASDAQ:BDSI) headfirst. Deerfield Management, managed by James E. Flynn, assembled the largest position in BioDelivery Sciences International, Inc. (NASDAQ:BDSI). Deerfield Management had $23.4 million invested in the company at the end of the quarter. Julian Baker and Felix Baker’s Baker Bros. Advisors also made a $6.2 million investment in the stock during the quarter. The other funds with brand new BDSI positions are Timothy P. Lynch’s Stonepine Capital, Dov Gertzulin’s DG Capital Management, and Richard Driehaus’s Driehaus Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as BioDelivery Sciences International, Inc. (NASDAQ:BDSI) but similarly valued. These stocks are Extreme Networks, Inc (NASDAQ:EXTR), Global Indemnity Limited (NASDAQ:GBLI), Seneca Foods Corp (NASDAQ:SENEA), and ViewRay, Inc. (NASDAQ:VRAY). This group of stocks’ market values resemble BDSI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EXTR 16 48943 -1
GBLI 4 25028 -2
SENEA 7 25303 0
VRAY 12 81516 -10
Average 9.75 45198 -3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $103 million in BDSI’s case. Extreme Networks, Inc (NASDAQ:EXTR) is the most popular stock in this table. On the other hand Global Indemnity Limited (NASDAQ:GBLI) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks BioDelivery Sciences International, Inc. (NASDAQ:BDSI) 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 BDSI as the stock returned 26.1% 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.