The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Aravive, Inc. (NASDAQ:ARAV).
Is ARAV a good stock to buy now? ARAV shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 7 hedge funds’ portfolios at the end of September. Our calculations also showed that ARAV 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). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Northern Technologies International Corp (NASDAQ:NTIC), iMedia Brands, Inc. (NASDAQ:IMBI), and Computer Task Group, Inc. (NASDAQ:CTG) to gather more data points.
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.
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. With all of this in mind let’s take a peek at the key hedge fund action surrounding Aravive, Inc. (NASDAQ:ARAV).
What does smart money think about Aravive, Inc. (NASDAQ:ARAV)?
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in ARAV over the last 21 quarters. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
The largest stake in Aravive, Inc. (NASDAQ:ARAV) was held by Renaissance Technologies, which reported holding $2.4 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $1.1 million position. Other investors bullish on the company included Baker Bros. Advisors, Marshall Wace LLP, and AQR Capital Management. In terms of the portfolio weights assigned to each position Two Sigma Advisors allocated the biggest weight to Aravive, Inc. (NASDAQ:ARAV), around 0.0031% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, setting aside 0.0028 percent of its 13F equity portfolio to ARAV.
Since Aravive, Inc. (NASDAQ:ARAV) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of hedgies that elected to cut their positions entirely by the end of the third quarter. Interestingly, Mitchell Blutt’s Consonance Capital Management dropped the largest investment of the “upper crust” of funds tracked by Insider Monkey, comprising close to $11.2 million in stock, and Srini Akkaraju and Michael Dybbs’s Samsara BioCapital was right behind this move, as the fund said goodbye to about $6.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Aravive, Inc. (NASDAQ:ARAV). These stocks are Northern Technologies International Corp (NASDAQ:NTIC), iMedia Brands, Inc. (NASDAQ:IMBI), Computer Task Group, Inc. (NASDAQ:CTG), Core Molding Technologies, Inc. (NYSE:CMT), Drive Shack Inc. (NYSE:DS), Advanced Emissions Solutions, Inc. (NASDAQ:ADES), and Idera Pharmaceuticals Inc (NASDAQ:IDRA). This group of stocks’ market valuations are similar to ARAV’s market valuation.
|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 5.6 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $4 million in ARAV’s case. Drive Shack Inc. (NYSE:DS) is the most popular stock in this table. On the other hand Northern Technologies International Corp (NASDAQ:NTIC) is the least popular one with only 4 bullish hedge fund positions. Aravive, Inc. (NASDAQ:ARAV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ARAV is 78.3. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on ARAV as the stock returned 23.2% since the end of Q3 (through 12/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.