Is Arbutus Biopharma Corp (ABUS) Worthy of Your Portfolio?

Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space..

In this article, we’ll take a look at the latest hedge fund activity, surrounding Arbutus Biopharma Corp (NASDAQ:ABUS). Overall, the stock registered a decline in popularity among the funds in our database during the third quarter, and 11 funds reported long positions in ABUS as of the end of September. 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 Cellectis SA (ADR) (NASDAQ:CLLS), FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW), and MVC Capital, Inc. (NYSE:MVC) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

With all of this in mind, let’s view the recent action regarding Arbutus Biopharma Corp (NASDAQ:ABUS).

Hedge fund activity in Arbutus Biopharma Corp (NASDAQ:ABUS)

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, down by 15% from one quarter earlier. By comparison, nine hedge funds held shares or bullish call options in ABUS heading into this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Daniel Gold’s QVT Financial has the number one position in Arbutus Biopharma Corp (NASDAQ:ABUS), worth close to $55.1 million, amounting to 2.1% of its total 13F portfolio. Coming in second is Richard Gerson and Navroz D. Udwadia of Falcon Edge Capital, with a $9 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions include Arthur B Cohen and Joseph Healey’s Healthcor Management LP, D E Shaw, one of the biggest hedge funds in the world, and Steven Boyd’s Armistice Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Judging by the fact that Arbutus Biopharma Corp (NASDAQ:ABUS) has encountered declining sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of fund managers that decided to sell off their entire stakes in the third quarter. It’s worth mentioning that William Michaelcheck’s Mariner Investment Group got rid of the largest stake of the 700 funds monitored by Insider Monkey, totaling an estimated $0.3 million in stock, and Nathan Fischel’s DAFNA Capital Management was right behind this move, as the fund dropped about $0.3 million worth of shares.

Let’s now review hedge fund activity in other stocks similar to Arbutus Biopharma Corp (NASDAQ:ABUS). These stocks are Cellectis SA (ADR) (NASDAQ:CLLS), FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW), MVC Capital, Inc. (NYSE:MVC), and Northern Dynasty Minerals Ltd. (USA) (NYSEAMEX:NAK). This group of stocks’ market valuations are similar to ABUS’s market valuation.

As you can see these stocks had an average of eight funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $89 million in ABUS’s case. Cellectis SA (ADR) (NASDAQ:CLLS) and MVC Capital, Inc. (NYSE:MVC) are the most popular stocks in this table. On the other hand FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW) is the least popular one with only three bullish hedge fund positions. Compared to these stocks Arbutus Biopharma Corp (NASDAQ:ABUS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None