The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtBaudax Bio, Inc. (NASDAQ:BXRX) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Is Baudax Bio, Inc. (NASDAQ:BXRX) a sound investment today? Prominent investors were taking a bullish view. The number of long hedge fund bets moved up by 1 lately. Our calculations also showed that BXRX 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). BXRX was in 11 hedge funds’ portfolios at the end of the first quarter of 2020. There were 10 hedge funds in our database with BXRX positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. 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 go over the new hedge fund action regarding Baudax Bio, Inc. (NASDAQ:BXRX).
Hedge fund activity in Baudax Bio, Inc. (NASDAQ:BXRX)
At the end of the first quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in BXRX a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Among these funds, North Run Capital held the most valuable stake in Baudax Bio, Inc. (NASDAQ:BXRX), which was worth $2.9 million at the end of the third quarter. On the second spot was Corsair Capital Management which amassed $2.2 million worth of shares. Alyeska Investment Group, Stonepine Capital, and Alyeska Investment Group 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 North Run Capital allocated the biggest weight to Baudax Bio, Inc. (NASDAQ:BXRX), around 3.01% of its 13F portfolio. Stonepine Capital is also relatively very bullish on the stock, earmarking 1.6 percent of its 13F equity portfolio to BXRX.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Stonepine Capital, managed by Timothy P. Lynch, established the biggest position in Baudax Bio, Inc. (NASDAQ:BXRX). Stonepine Capital had $1.5 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $1 million investment in the stock during the quarter. The following funds were also among the new BXRX investors: Hal Mintz’s Sabby Capital and Neil Shahrestani’s Ikarian Capital.
Let’s go over hedge fund activity in other stocks similar to Baudax Bio, Inc. (NASDAQ:BXRX). We will take a look at Mediwound Ltd (NASDAQ:MDWD), NanoViricides Inc (NYSE:NNVC), Sensus Healthcare, Inc. (NASDAQ:SRTS), and Mid-Southern Bancorp, Inc. (NASDAQ:MSVB). This group of stocks’ market valuations are similar to BXRX’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 2 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $10 million in BXRX’s case. Mid-Southern Bancorp, Inc. (NASDAQ:MSVB) is the most popular stock in this table. On the other hand Mediwound Ltd (NASDAQ:MDWD) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Baudax Bio, Inc. (NASDAQ:BXRX) 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 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on BXRX as the stock returned 67.3% in Q2 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.
Disclosure: None. This article was originally published at Insider Monkey.