Is ALVR A Good Stock To Buy Now?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to AlloVir, Inc. (NASDAQ:ALVR) changed recently.

Is ALVR a good stock to buy now? Investors who are in the know were buying. The number of long hedge fund positions rose by 11 recently. AlloVir, Inc. (NASDAQ:ALVR) was in 11 hedge funds’ portfolios at the end of September. Our calculations also showed that ALVR 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.

Oleg Nodelman EcoR1 Capital

Oleg Nodelman of EcoR1 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. With all of this in mind let’s take a look at the recent hedge fund action surrounding AlloVir, Inc. (NASDAQ:ALVR).

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

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11 from the second quarter of 2020. By comparison, 0 hedge funds held shares or bullish call options in ALVR 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.

Is ALVR A Good Stock To Buy?

More specifically, Redmile Group was the largest shareholder of AlloVir, Inc. (NASDAQ:ALVR), with a stake worth $64.2 million reported as of the end of September. Trailing Redmile Group was Woodline Partners, which amassed a stake valued at $32.8 million. Alkeon Capital Management, EcoR1 Capital, and Sectoral Asset Management 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 Redmile Group allocated the biggest weight to AlloVir, Inc. (NASDAQ:ALVR), around 1.18% of its 13F portfolio. Woodline Partners is also relatively very bullish on the stock, designating 1.07 percent of its 13F equity portfolio to ALVR.

Now, key money managers have jumped into AlloVir, Inc. (NASDAQ:ALVR) headfirst. Redmile Group, managed by Jeremy Green, created the most valuable position in AlloVir, Inc. (NASDAQ:ALVR). Redmile Group had $64.2 million invested in the company at the end of the quarter. Michael Rockefeller and KarláKroeker’s Woodline Partners also made a $32.8 million investment in the stock during the quarter. The following funds were also among the new ALVR investors: Panayotis Takis Sparaggis’s Alkeon Capital Management, Oleg Nodelman’s EcoR1 Capital, and Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as AlloVir, Inc. (NASDAQ:ALVR) but similarly valued. We will take a look at Six Flags Entertainment Corp (NYSE:SIX), AMTD International Inc. (NYSE:HKIB), MaxLinear, Inc. (NYSE:MXL), Hub Group Inc (NASDAQ:HUBG), Sunstone Hotel Investors Inc (NYSE:SHO), Sonic Automotive Inc (NYSE:SAH), and Piedmont Office Realty Trust, Inc. (NYSE:PDM). This group of stocks’ market caps match ALVR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SIX 37 528050 4
HKIB 1 10 0
MXL 18 76669 3
HUBG 20 191042 -1
SHO 17 191049 -6
SAH 17 81089 5
PDM 14 46030 3
Average 17.7 159134 1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $159 million. That figure was $154 million in ALVR’s case. Six Flags Entertainment Corp (NYSE:SIX) is the most popular stock in this table. On the other hand AMTD International Inc. (NYSE:HKIB) is the least popular one with only 1 bullish hedge fund positions. AlloVir, Inc. (NASDAQ:ALVR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ALVR is 32.2. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on ALVR as the stock returned 58.6% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.

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