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Hedge Funds Have Never Been This Bullish On Matinas Biopharma Holdings, Inc. (MTNB)

In this article we will take a look at whether hedge funds think Matinas Biopharma Holdings, Inc. (NYSE:MTNB) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Matinas Biopharma Holdings, Inc. (NYSE:MTNB) investors should be aware of an increase in enthusiasm from smart money recently. Our calculations also showed that MTNB 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.

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 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Felix Baker - Baker Bros.

Felix Baker of Baker Bros.

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. Now we’re going to go over the latest hedge fund action encompassing Matinas Biopharma Holdings, Inc. (NYSE:MTNB).

Hedge fund activity in Matinas Biopharma Holdings, Inc. (NYSE:MTNB)

At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MTNB over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

The largest stake in Matinas Biopharma Holdings, Inc. (NYSE:MTNB) was held by Vivo Capital, which reported holding $6.8 million worth of stock at the end of September. It was followed by Baker Bros. Advisors with a $2.3 million position. Other investors bullish on the company included Renaissance Technologies, Millennium Management, and Water Island Capital. In terms of the portfolio weights assigned to each position Vivo Capital allocated the biggest weight to Matinas Biopharma Holdings, Inc. (NYSE:MTNB), around 0.61% of its 13F portfolio. Water Island Capital is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to MTNB.

As one would reasonably expect, key hedge funds were leading the bulls’ herd. Water Island Capital, managed by John Orrico, assembled the most outsized position in Matinas Biopharma Holdings, Inc. (NYSE:MTNB). Water Island Capital had $0.3 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.1 million investment in the stock during the quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Matinas Biopharma Holdings, Inc. (NYSE:MTNB) but similarly valued. These stocks are Tuanche Limited (NASDAQ:TC), First Community Corporation (NASDAQ:FCCO), Colony Bankcorp Inc (NASDAQ:CBAN), and Beyond Air, Inc. (NASDAQ:XAIR). This group of stocks’ market valuations are similar to MTNB’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TC 1 33 0
FCCO 5 8309 -1
CBAN 4 14164 0
XAIR 4 4495 1
Average 3.5 6750 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.5 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $11 million in MTNB’s case. First Community Corporation (NASDAQ:FCCO) is the most popular stock in this table. On the other hand Tuanche Limited (NASDAQ:TC) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Matinas Biopharma Holdings, Inc. (NYSE:MTNB) 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 12.2% in 2020 through June 17th but still managed to beat the market by 14.8 percentage points. Hedge funds were also right about betting on MTNB as the stock returned 35.8% so far in Q2 (through June 17th) 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.