Is ADMA A Good Stock To Buy According To Hedge Funds?

After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards ADMA Biologics Inc (NASDAQ:ADMA).

Is ADMA a good stock to buy? Investors who are in the know were reducing their bets on the stock. The number of bullish hedge fund bets decreased by 1 in recent months. ADMA Biologics Inc (NASDAQ:ADMA) was in 20 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 21. Our calculations also showed that ADMA 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.

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 was 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Gavin Saitowitz of Prelude Capital

Gavin Saitowitz of Prelude Capital

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 we’re going to go over the new hedge fund action encompassing ADMA Biologics Inc (NASDAQ:ADMA).

Do Hedge Funds Think ADMA Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in ADMA over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in ADMA Biologics Inc (NASDAQ:ADMA) was held by Perceptive Advisors, which reported holding $39.6 million worth of stock at the end of September. It was followed by Marshall Wace LLP with a $6 million position. Other investors bullish on the company included 683 Capital Partners, Consonance Capital Management, and Sphera Global Healthcare Fund. In terms of the portfolio weights assigned to each position Prosight Capital allocated the biggest weight to ADMA Biologics Inc (NASDAQ:ADMA), around 0.61% of its 13F portfolio. Perceptive Advisors is also relatively very bullish on the stock, dishing out 0.58 percent of its 13F equity portfolio to ADMA.

Seeing as ADMA Biologics Inc (NASDAQ:ADMA) has faced bearish sentiment from hedge fund managers, logic holds that there exists a select few hedgies that decided to sell off their positions entirely by the end of the third quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group said goodbye to the largest position of the 750 funds followed by Insider Monkey, comprising close to $0.4 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also dropped its stock, about $0.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 1 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as ADMA Biologics Inc (NASDAQ:ADMA) but similarly valued. These stocks are Cyclerion Therapeutics, Inc. (NASDAQ:CYCN), Genasys Inc. (NASDAQ:GNSS), Venator Materials PLC (NYSE:VNTR), Caledonia Mining Corporation Plc (NYSE:CMCL), Lifetime Brands Inc (NASDAQ:LCUT), Gamida Cell Ltd. (NASDAQ:GMDA), and Verastem Inc (NASDAQ:VSTM). This group of stocks’ market caps match ADMA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CYCN 6 69953 -5
GNSS 5 20993 0
VNTR 10 20533 1
CMCL 4 4812 1
LCUT 5 2117 3
GMDA 10 31096 1
VSTM 11 34590 -7
Average 7.3 26299 -0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.3 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $64 million in ADMA’s case. Verastem Inc (NASDAQ:VSTM) is the most popular stock in this table. On the other hand Caledonia Mining Corporation Plc (NYSE:CMCL) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks ADMA Biologics Inc (NASDAQ:ADMA) is more popular among hedge funds. Our overall hedge fund sentiment score for ADMA is 82.6. 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 gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Unfortunately ADMA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ADMA were disappointed as the stock returned -11.3% since the end of the third quarter (through 12/14) 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.