In this article we will check out the progression of hedge fund sentiment towards CTI Biopharma Corp. (NASDAQ:CTIC) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
CTI Biopharma Corp. (NASDAQ:CTIC) has seen an increase in hedge fund sentiment recently. Our calculations also showed that CTIC 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 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.
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. Keeping this in mind let’s go over the key hedge fund action encompassing CTI Biopharma Corp. (NASDAQ:CTIC).
What have hedge funds been doing with CTI Biopharma Corp. (NASDAQ:CTIC)?
At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 60% from one quarter earlier. By comparison, 6 hedge funds held shares or bullish call options in CTIC a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Samuel Isaly’s OrbiMed Advisors has the largest position in CTI Biopharma Corp. (NASDAQ:CTIC), worth close to $8.8 million, corresponding to 0.1% of its total 13F portfolio. The second most bullish fund manager is Mark Lampert of Biotechnology Value Fund / BVF Inc, with a $6.4 million position; 0.6% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions comprise Timothy P. Lynch’s Stonepine Capital, Renaissance Technologies and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Stonepine Capital allocated the biggest weight to CTI Biopharma Corp. (NASDAQ:CTIC), around 6.26% of its 13F portfolio. Biotechnology Value Fund / BVF Inc is also relatively very bullish on the stock, setting aside 0.59 percent of its 13F equity portfolio to CTIC.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Stonepine Capital, managed by Timothy P. Lynch, initiated the most outsized position in CTI Biopharma Corp. (NASDAQ:CTIC). Stonepine Capital had $5.9 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0 million investment in the stock during the quarter. The only other fund with a new position in the stock is Cliff Asness’s AQR Capital Management.
Let’s now review hedge fund activity in other stocks similar to CTI Biopharma Corp. (NASDAQ:CTIC). We will take a look at MTBC, Inc. (NASDAQ:MTBC), RR Donnelley & Sons Company (NYSE:RRD), Acme United Corporation (NYSE:ACU), and Envela Corporation (NYSE:ELA). This group of stocks’ market values match CTIC’s market value.
|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 4 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $23 million in CTIC’s case. RR Donnelley & Sons Company (NYSE:RRD) is the most popular stock in this table. On the other hand MTBC, Inc. (NASDAQ:MTBC) is the least popular one with only 2 bullish hedge fund positions. CTI Biopharma Corp. (NASDAQ:CTIC) is not the most popular stock in this group but hedge fund interest is still above average. 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 gained 12.2% in 2020 through June 17th but still beat the market by 14.8 percentage points. Hedge funds were also right about betting on CTIC as the stock returned 30.4% in Q2 (through June 17th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.