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How Did Iovance Biotherapeutics, Inc. (IOVA) Perform In Comparison to Hedge Fund Favorites in 2019?

We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained more than 57% each. Hedge funds’ top 3 stock picks returned 44.6% this year and beat the S&P 500 ETFs by almost 14 percentage points. That’s a big deal. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Is Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) a safe stock to buy now? Prominent investors are getting more bullish. The number of long hedge fund positions inched up by 6 lately. Our calculations also showed that IOVA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.

Samuel Isaly Orbimed Advisors

Samuel Isaly of OrbiMed Advisors

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind we’re going to take a look at the fresh hedge fund action regarding Iovance Biotherapeutics, Inc. (NASDAQ:IOVA).

Hedge fund activity in Iovance Biotherapeutics, Inc. (NASDAQ:IOVA)

At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in IOVA over the last 17 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

Among these funds, Perceptive Advisors held the most valuable stake in Iovance Biotherapeutics, Inc. (NASDAQ:IOVA), which was worth $200.5 million at the end of the third quarter. On the second spot was venBio Select Advisor which amassed $192.9 million worth of shares. Farallon Capital, OrbiMed Advisors, and Great Point 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 Frazier Healthcare Partners allocated the biggest weight to Iovance Biotherapeutics, Inc. (NASDAQ:IOVA), around 9.96% of its 13F portfolio. Great Point Partners is also relatively very bullish on the stock, setting aside 8.8 percent of its 13F equity portfolio to IOVA.

Consequently, specific money managers were breaking ground themselves. Mangrove Partners, managed by Nathaniel August, assembled the largest position in Iovance Biotherapeutics, Inc. (NASDAQ:IOVA). Mangrove Partners had $21.7 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $7.4 million position during the quarter. The following funds were also among the new IOVA investors: Thomas Bailard’s Bailard Inc, Noam Gottesman’s GLG Partners, and Renaissance Technologies.

Let’s now take a look at hedge fund activity in other stocks similar to Iovance Biotherapeutics, Inc. (NASDAQ:IOVA). We will take a look at Afya Limited (NASDAQ:AFYA), Guangshen Railway Company Limited (NYSE:GSH), United Community Banks Inc (NASDAQ:UCBI), and CRISPR Therapeutics AG (NASDAQ:CRSP). This group of stocks’ market values are similar to IOVA’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AFYA 7 66858 7
GSH 2 4202 1
UCBI 13 50527 1
CRSP 16 150251 3
Average 9.5 67960 3

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $898 million in IOVA’s case. CRISPR Therapeutics AG (NASDAQ:CRSP) is the most popular stock in this table. On the other hand Guangshen Railway Company Limited (NYSE:GSH) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on IOVA as the stock returned 226.1% so far in 2019 (through 12/23) 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.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Disclosure: None. This article was originally published at Insider Monkey.

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