Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Abeona Therapeutics Inc (NASDAQ:ABEO)? The smart money sentiment can provide an answer to this question.
Is ABEO a good stock to buy now? The best stock pickers were turning less bullish. The number of long hedge fund bets dropped by 4 lately. Abeona Therapeutics Inc (NASDAQ:ABEO) was in 14 hedge funds’ portfolios at the end of September. The all time high for this statistic is 22. Our calculations also showed that ABEO 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 18 hedge funds in our database with ABEO positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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 take a glance at the key hedge fund action surrounding Abeona Therapeutics Inc (NASDAQ:ABEO).
Do Hedge Funds Think ABEO Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -22% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in ABEO a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the biggest position in Abeona Therapeutics Inc (NASDAQ:ABEO). Adage Capital Management has a $5.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Jeffrey Jay and David Kroin of Great Point Partners, with a $4 million position; 0.4% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Fred Knoll’s Knoll Capital Management, Israel Englander’s Millennium Management and Michael Rockefeller and KarláKroeker’s Woodline Partners. In terms of the portfolio weights assigned to each position Knoll Capital Management allocated the biggest weight to Abeona Therapeutics Inc (NASDAQ:ABEO), around 2.39% of its 13F portfolio. Great Point Partners is also relatively very bullish on the stock, setting aside 0.36 percent of its 13F equity portfolio to ABEO.
Since Abeona Therapeutics Inc (NASDAQ:ABEO) has witnessed declining sentiment from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of hedge funds that decided to sell off their full holdings by the end of the third quarter. At the top of the heap, Julian Baker and Felix Baker’s Baker Bros. Advisors sold off the biggest investment of all the hedgies monitored by Insider Monkey, worth close to $4.6 million in stock. Steve Cohen’s fund, Point72 Asset Management, also dumped its stock, about $3.2 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 4 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Abeona Therapeutics Inc (NASDAQ:ABEO) but similarly valued. These stocks are Magal Security Systems Ltd. (NASDAQ:MAGS), Jianpu Technology Inc. (NYSE:JT), Prudential Bancorp, Inc. (NASDAQ:PBIP), ClearPoint Neuro Inc. (NASDAQ:CLPT), Concord Medical Services Hldg Ltd (NYSE:CCM), Perma-Fix Environmental Services, Inc. (NASDAQ:PESI), and eMagin Corporation (NYSE:EMAN). This group of stocks’ market values resemble ABEO’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 2.4 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $18 million in ABEO’s case. Jianpu Technology Inc. (NYSE:JT) is the most popular stock in this table. On the other hand Concord Medical Services Hldg Ltd (NYSE:CCM) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Abeona Therapeutics Inc (NASDAQ:ABEO) is more popular among hedge funds. Our overall hedge fund sentiment score for ABEO is 70.1. 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. 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 returned 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on ABEO as the stock returned 50% since the end of September (through 12/8) 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.
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Disclosure: None. This article was originally published at Insider Monkey.