Is ASRT A Good Stock To Buy Now?

In this article we will take a look at whether hedge funds think Assertio Holdings Inc. (NASDAQ:ASRT) 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 ASRT a good stock to buy now? Assertio Holdings Inc. (NASDAQ:ASRT) investors should pay attention to a decrease in activity from the world’s largest hedge funds of late. Assertio Holdings Inc. (NASDAQ:ASRT) was in 13 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 20. There were 18 hedge funds in our database with ASRT holdings at the end of June. Our calculations also showed that ASRT 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.

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet 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. Now let’s take a look at the recent hedge fund action regarding Assertio Holdings Inc. (NASDAQ:ASRT).

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

At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -28% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ASRT over the last 21 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the most valuable position in Assertio Holdings Inc. (NASDAQ:ASRT), worth close to $4.3 million, amounting to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot of Highbridge Capital Management, with a $4.1 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions encompass David Rosen’s Rubric Capital Management, D. E. Shaw’s D E Shaw and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Highbridge Capital Management allocated the biggest weight to Assertio Holdings Inc. (NASDAQ:ASRT), around 0.22% of its 13F portfolio. Rubric Capital Management is also relatively very bullish on the stock, designating 0.21 percent of its 13F equity portfolio to ASRT.

Seeing as Assertio Holdings Inc. (NASDAQ:ASRT) has witnessed falling interest from hedge fund managers, it’s safe to say that there exists a select few fund managers who were dropping their entire stakes by the end of the third quarter. At the top of the heap, James A. Silverman’s Opaleye Management cut the biggest position of the 750 funds tracked by Insider Monkey, comprising an estimated $0.8 million in stock. Israel Englander’s fund, Millennium Management, also dumped its stock, about $0.2 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 5 funds by the end of the third quarter.

Let’s now review hedge fund activity in other stocks similar to Assertio Holdings Inc. (NASDAQ:ASRT). We will take a look at Navidea Biopharmaceuticals Inc (NYSE:NAVB), Rhinebeck Bancorp, Inc. (NASDAQ:RBKB), Oncolytics Biotech, Inc. (NASDAQ:ONCY), United Bancshares Inc. (NASDAQ:UBOH), Marker Therapeutics, Inc. (NASDAQ:MRKR), United-Guardian, Inc. (NASDAQ:UG), and Manning and Napier Inc (NYSE:MN). This group of stocks’ market valuations are similar to ASRT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NAVB 3 443 1
RBKB 2 4432 0
ONCY 3 266 1
UBOH 1 6293 0
MRKR 2 414 -1
UG 2 6313 0
MN 10 9218 0
Average 3.3 3911 0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.3 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $14 million in ASRT’s case. Manning and Napier Inc (NYSE:MN) is the most popular stock in this table. On the other hand United Bancshares Inc. (NASDAQ:UBOH) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Assertio Holdings Inc. (NASDAQ:ASRT) is more popular among hedge funds. Our overall hedge fund sentiment score for ASRT is 69.5. 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. Unfortunately ASRT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ASRT were disappointed as the stock returned -35.8% since the end of the third quarter (through 12/8) 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.