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 Assembly Biosciences Inc (NASDAQ:ASMB).
Is ASMB a good stock to buy now? Assembly Biosciences Inc (NASDAQ:ASMB) was in 22 hedge funds’ portfolios at the end of September. The all time high for this statistic is 21. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ASMB shareholders have witnessed an increase in enthusiasm from smart money recently. There were 19 hedge funds in our database with ASMB holdings at the end of June. Our calculations also showed that ASMB 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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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 we’re going to review the recent hedge fund action encompassing Assembly Biosciences Inc (NASDAQ:ASMB).
Do Hedge Funds Think ASMB Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in ASMB over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Assembly Biosciences Inc (NASDAQ:ASMB) was held by EcoR1 Capital, which reported holding $41.9 million worth of stock at the end of September. It was followed by Consonance Capital Management with a $32.4 million position. Other investors bullish on the company included Baker Bros. Advisors, Rock Springs Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Consonance Capital Management allocated the biggest weight to Assembly Biosciences Inc (NASDAQ:ASMB), around 3.95% of its 13F portfolio. EcoR1 Capital is also relatively very bullish on the stock, setting aside 2.99 percent of its 13F equity portfolio to ASMB.
Consequently, some big names have jumped into Assembly Biosciences Inc (NASDAQ:ASMB) headfirst. Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, established the biggest position in Assembly Biosciences Inc (NASDAQ:ASMB). Healthcor Management LP had $8.5 million invested in the company at the end of the quarter. Christiana Goh Bardon’s Burrage Capital Management also made a $3.3 million investment in the stock during the quarter. The other funds with brand new ASMB positions are Andre F. Perold’s HighVista Strategies, D. E. Shaw’s D E Shaw, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).
Let’s check out hedge fund activity in other stocks similar to Assembly Biosciences Inc (NASDAQ:ASMB). These stocks are TrueCar Inc (NASDAQ:TRUE), Apollo Investment Corp. (NASDAQ:AINV), ZIOPHARM Oncology Inc. (NASDAQ:ZIOP), Ellington Financial Inc. (NYSE:EFC), SIGA Technologies Inc. (NASDAQ:SIGA), Turning Point Brands, Inc. (NYSE:TPB), and BlackRock Resources & Commodities Strategy Trust (NYSE:BCX). This group of stocks’ market values match ASMB’s market value.
|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 13.3 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $196 million in ASMB’s case. Turning Point Brands, Inc. (NYSE:TPB) is the most popular stock in this table. On the other hand Apollo Investment Corp. (NASDAQ:AINV) is the least popular one with only 5 bullish hedge fund positions. Assembly Biosciences Inc (NASDAQ:ASMB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ASMB is 82.7. 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 positive signal but 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 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately ASMB wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ASMB were disappointed as the stock returned -62.2% since the end of September (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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.