A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on BiomX Inc. (NYSE:PHGE).
Is BiomX Inc. (NYSE:PHGE) ready to rally soon? Hedge funds were getting less bullish. The number of bullish hedge fund bets decreased by 1 in recent months. BiomX Inc. (NYSE:PHGE) was in 6 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 8. Our calculations also showed that PHGE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 7 hedge funds in our database with PHGE positions at the end of the second quarter.
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 66 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.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s view the recent hedge fund action encompassing BiomX Inc. (NYSE:PHGE).
How have hedgies been trading BiomX Inc. (NYSE:PHGE)?
At the end of September, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PHGE over the last 21 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.
More specifically, OrbiMed Advisors was the largest shareholder of BiomX Inc. (NYSE:PHGE), with a stake worth $14.7 million reported as of the end of September. Trailing OrbiMed Advisors was Millennium Management, which amassed a stake valued at $2.6 million. Weiss Asset Management, LMR Partners, and 683 Capital Partners 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 OrbiMed Advisors allocated the biggest weight to BiomX Inc. (NYSE:PHGE), around 0.19% of its 13F portfolio. Weiss Asset Management is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to PHGE.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Glazer Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified PHGE as a viable investment and initiated a position in the stock.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as BiomX Inc. (NYSE:PHGE) but similarly valued. We will take a look at GlycoMimetics, Inc. (NASDAQ:GLYC), NewHold Investment Corp. (NASDAQ:NHIC), Natural Resource Partners LP (NYSE:NRP), CIM Commercial Trust Corporation (NASDAQ:CMCT), Coastal Financial Corporation (NASDAQ:CCB), Tuniu Corporation (NASDAQ:TOUR), and Mid Penn Bancorp (NASDAQ:MPB). All of these stocks’ market caps resemble PHGE’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 5.1 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $18 million in PHGE’s case. GlycoMimetics, Inc. (NASDAQ:GLYC) is the most popular stock in this table. On the other hand Natural Resource Partners LP (NYSE:NRP) is the least popular one with only 2 bullish hedge fund positions. BiomX Inc. (NYSE:PHGE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PHGE is 46.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and beat the market again by 16.1 percentage points. Unfortunately PHGE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PHGE were disappointed as the stock returned -7.1% since the end of September (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.