In this article we will check out the progression of hedge fund sentiment towards NeuBase Therapeutics, Inc. (NASDAQ:NBSE) 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.
NeuBase Therapeutics, Inc. (NASDAQ:NBSE) was in 6 hedge funds’ portfolios at the end of September. The all time high for this statistics is 9. NBSE has experienced a decrease in support from the world’s most elite money managers in recent months. There were 9 hedge funds in our database with NBSE holdings at the end of June. Our calculations also showed that NBSE 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).
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. With all of this in mind let’s go over the recent hedge fund action encompassing NeuBase Therapeutics, Inc. (NASDAQ:NBSE).
What does smart money think about NeuBase Therapeutics, Inc. (NASDAQ:NBSE)?
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the previous quarter. By comparison, 2 hedge funds held shares or bullish call options in NBSE a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Greenlight Capital was the largest shareholder of NeuBase Therapeutics, Inc. (NASDAQ:NBSE), with a stake worth $15.4 million reported as of the end of September. Trailing Greenlight Capital was Renaissance Technologies, which amassed a stake valued at $4.2 million. Sio Capital, Sphera Global Healthcare Fund, and Arrowstreet Capital 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 Greenlight Capital allocated the biggest weight to NeuBase Therapeutics, Inc. (NASDAQ:NBSE), around 1.26% of its 13F portfolio. Sio Capital is also relatively very bullish on the stock, dishing out 0.46 percent of its 13F equity portfolio to NBSE.
Seeing as NeuBase Therapeutics, Inc. (NASDAQ:NBSE) has experienced a decline in interest from hedge fund managers, we can see that there exists a select few fund managers who sold off their full holdings in the third quarter. Interestingly, Israel Englander’s Millennium Management dumped the largest position of the “upper crust” of funds monitored by Insider Monkey, comprising close to $3.7 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund cut about $0.2 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 3 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to NeuBase Therapeutics, Inc. (NASDAQ:NBSE). These stocks are Precision Drilling Corp (NYSE:PDS), Carter Bankshares, Inc. (NASDAQ:CARE), Scorpio Bulkers Inc (NYSE:SALT), TD Holdings, Inc. (NASDAQ:GLG), PowerFleet, Inc. (NASDAQ:PWFL), Select Interior Concepts, Inc. (NASDAQ:SIC), and Atlantic Power Corp (NYSE:AT). This group of stocks’ market values match NBSE’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 8.7 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $24 million in NBSE’s case. Select Interior Concepts, Inc. (NASDAQ:SIC) is the most popular stock in this table. On the other hand Scorpio Bulkers Inc (NYSE:SALT) is the least popular one with only 2 bullish hedge fund positions. NeuBase Therapeutics, Inc. (NASDAQ:NBSE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NBSE is 35.3. 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 negative signal and 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 surpassed the market again by 16.1 percentage points. Unfortunately NBSE wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NBSE investors were disappointed as the stock returned 1.4% 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.