Is APLT A Good Stock To Buy Now?

In this article we will take a look at whether hedge funds think Applied Therapeutics, Inc. (NASDAQ:APLT) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is APLT a good stock to buy now? Applied Therapeutics, Inc. (NASDAQ:APLT) shareholders have witnessed a decrease in hedge fund sentiment in recent months. Applied Therapeutics, Inc. (NASDAQ:APLT) was in 8 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 16. Our calculations also showed that APLT 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.

In the eyes of most investors, hedge funds are seen as underperforming, old financial tools of the past. While there are more than 8000 funds trading at the moment, Our researchers choose to focus on the moguls of this group, approximately 850 funds. These hedge fund managers handle the majority of all hedge funds’ total asset base, and by paying attention to their matchless investments, Insider Monkey has spotted numerous investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Richard Driehaus of Driehaus 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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 gander at the fresh hedge fund action regarding Applied Therapeutics, Inc. (NASDAQ:APLT).

Hedge fund activity in Applied Therapeutics, Inc. (NASDAQ:APLT)

At the end of September, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -43% from the previous quarter. By comparison, 3 hedge funds held shares or bullish call options in APLT a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

More specifically, OrbiMed Advisors was the largest shareholder of Applied Therapeutics, Inc. (NASDAQ:APLT), with a stake worth $32.1 million reported as of the end of September. Trailing OrbiMed Advisors was Rock Springs Capital Management, which amassed a stake valued at $20.6 million. Alkeon Capital Management, Knoll Capital Management, and Driehaus 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 Knoll Capital Management allocated the biggest weight to Applied Therapeutics, Inc. (NASDAQ:APLT), around 12.5% of its 13F portfolio. Rock Springs Capital Management is also relatively very bullish on the stock, dishing out 0.52 percent of its 13F equity portfolio to APLT.

Due to the fact that Applied Therapeutics, Inc. (NASDAQ:APLT) has faced a decline in interest from hedge fund managers, it’s easy to see that there exists a select few funds who sold off their positions entirely last quarter. At the top of the heap, James E. Flynn’s Deerfield Management said goodbye to the largest investment of all the hedgies monitored by Insider Monkey, worth close to $10.1 million in stock, and Manfred Yu’s Acuta Capital Partners was right behind this move, as the fund said goodbye to about $6.6 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 6 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Applied Therapeutics, Inc. (NASDAQ:APLT) but similarly valued. We will take a look at Brookdale Senior Living, Inc. (NYSE:BKD), Pacific Ethanol Inc (NASDAQ:PEIX), WisdomTree Investments, Inc. (NASDAQ:WETF), Renalytix AI plc (NASDAQ:RNLX), Trevena Inc (NASDAQ:TRVN), Collectors Universe, Inc. (NASDAQ:CLCT), and AngioDynamics, Inc. (NASDAQ:ANGO). All of these stocks’ market caps are similar to APLT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BKD 20 181384 -4
PEIX 11 81327 8
WETF 22 34490 4
RNLX 4 16709 4
TRVN 5 2318 -1
CLCT 11 65834 2
ANGO 14 37453 4
Average 12.4 59931 2.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.4 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $100 million in APLT’s case. WisdomTree Investments, Inc. (NASDAQ:WETF) is the most popular stock in this table. On the other hand Renalytix AI plc (NASDAQ:RNLX) is the least popular one with only 4 bullish hedge fund positions. Applied Therapeutics, Inc. (NASDAQ:APLT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for APLT is 25.1. 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. 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 31.6% in 2020 through December 2nd and surpassed the market again by 16 percentage points. Unfortunately APLT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); APLT investors were disappointed as the stock returned 0.7% since the end of September (through 12/2) 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.