Many investors, including Carl Icahn or Stan Druckenmiller, have been saying for a while now that the current market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the third quarter, many investors lost money due to unpredictable events such as the concerns over Valeant’s drug pricing policy that led to an overall drop among pharma stocks. Nevertheless, many of the stocks that tanked in the third quarter still sport strong fundamentals and their decline was more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Catabasis Pharmaceuticals Inc (NASDAQ:CATB) changed recently.
Catabasis Pharmaceuticals Inc (NASDAQ:CATB) investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. CATB was in 5 hedge funds’ portfolios at the end of September. There were 6 hedge funds in our database with CATB holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Shore Bancshares, Inc. (NASDAQ:SHBI), Farmland Partners Inc (NYSE:FPI), and Travelzoo Inc. (NASDAQ:TZOO) to gather more data points.
Keeping this in mind, we’re going to take a look at the fresh action regarding Catabasis Pharmaceuticals Inc (NASDAQ:CATB).
How have hedgies been trading Catabasis Pharmaceuticals Inc (NASDAQ:CATB)?
At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the second quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Camber Capital Management, managed by Stephen DuBois, holds the largest position in Catabasis Pharmaceuticals Inc (NASDAQ:CATB). Camber Capital Management has a $8.1 million position in the stock, comprising 0.7% of its 13F portfolio. The second most bullish fund manager is James E. Flynn of Deerfield Management, with a $5.1 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish encompass Israel Englander’s Millennium Management, Anand Parekh’s Alyeska Investment Group and D E Shaw.
Due to the fact that Catabasis Pharmaceuticals Inc (NASDAQ:CATB) has witnessed bearish sentiment from the smart money, we can see that there is a sect of funds who were dropping their positions entirely last quarter. It’s worth mentioning that Biotechnology Value Fund / BVF Inc cut the largest investment of the “upper crust” of funds watched by Insider Monkey, totaling about $2.7 million in stock. Marc Majzner’s fund, Clearline Capital, also cut its stock, about $0.6 million worth. These transactions are interesting, as total hedge fund interest fell by 1 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Catabasis Pharmaceuticals Inc (NASDAQ:CATB) but similarly valued. These stocks are Shore Bancshares, Inc. (NASDAQ:SHBI), Farmland Partners Inc (NYSE:FPI), Travelzoo Inc. (NASDAQ:TZOO), and Fortress Biotech Inc (NASDAQ:FBIO). All of these stocks’ market caps match CATB’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $14 million in CATB’s case. Travelzoo Inc. (NASDAQ:TZOO) is the most popular stock in this table. On the other hand Farmland Partners Inc (NYSE:FPI) is the least popular one with only 4 bullish hedge fund positions. Catabasis Pharmaceuticals Inc (NASDAQ:CATB) 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. In this regard TZOO might be a better candidate to consider a long position.