We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Assertio Holdings, Inc. (NASDAQ:ASRT) and determine whether hedge funds skillfully traded this stock.
Assertio Holdings, Inc. (NASDAQ:ASRT) has seen an increase in hedge fund sentiment recently. Assertio Holdings, Inc. (NASDAQ:ASRT) was in 18 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 20. Our calculations also showed that ASRT isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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 34% through August 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 are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. With all of this in mind we’re going to take a glance at the fresh hedge fund action surrounding Assertio Holdings, Inc. (NASDAQ:ASRT).
What does smart money think about Assertio Holdings, Inc. (NASDAQ:ASRT)?
Heading into the third quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ASRT over the last 20 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Assertio Holdings, Inc. (NASDAQ:ASRT), which was worth $5.5 million at the end of the third quarter. On the second spot was Highbridge Capital Management which amassed $3.7 million worth of shares. Rubric Capital Management, D E Shaw, and AQR Capital Management 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 Rubric Capital Management allocated the biggest weight to Assertio Holdings, Inc. (NASDAQ:ASRT), around 0.34% of its 13F portfolio. Highbridge Capital Management is also relatively very bullish on the stock, designating 0.32 percent of its 13F equity portfolio to ASRT.
As aggregate interest increased, key money managers were breaking ground themselves. Renaissance Technologies, established the most valuable position in Assertio Holdings, Inc. (NASDAQ:ASRT). Renaissance Technologies had $5.5 million invested in the company at the end of the quarter. Highbridge Capital Management also made a $3.7 million investment in the stock during the quarter. The other funds with new positions in the stock are David Rosen’s Rubric Capital Management, D. E. Shaw’s D E Shaw, and Cliff Asness’s AQR Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Assertio Holdings, Inc. (NASDAQ:ASRT) but similarly valued. We will take a look at Stealth BioTherapeutics Corp (NASDAQ:MITO), Goodrich Petroleum Corporation (NYSE:GDP), Identiv, Inc. (NASDAQ:INVE), China Automotive Systems, Inc. (NASDAQ:CAAS), Infrastructure and Energy Alternatives, Inc. (NASDAQ:IEA), Advanced Emissions Solutions, Inc. (NASDAQ:ADES), and AudioEye, Inc. (NASDAQ:AEYE). 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|
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.1 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $21 million in ASRT’s case. Infrastructure and Energy Alternatives, Inc. (NASDAQ:IEA) is the most popular stock in this table. On the other hand China Automotive Systems, Inc. (NASDAQ:CAAS) 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 87. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. Unfortunately ASRT wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ASRT were disappointed as the stock returned -22.1% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.