Is Autolus Therapeutics (AUTL) Overvalued?

Is Autolus Therapeutics plc (NASDAQ:AUTL) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is Autolus Therapeutics plc (AUTL) overvalued according to hedge funds? AUTL shareholders have witnessed a decrease in hedge fund sentiment of late. Autolus Therapeutics plc (NASDAQ:AUTL) was in 7 hedge funds’ portfolios at the end of September. The all time high for this statistics is 14. There were 13 hedge funds in our database with AUTL positions at the end of the second quarter. Our calculations also showed that AUTL 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.

In the financial world there are many gauges shareholders put to use to evaluate their holdings. Some of the most innovative gauges are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the market by a solid amount (see the details here).

Millennium Management, Catapult Capital Management

Israel Englander of Millennium Management

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. Keeping this in mind we’re going to review the key hedge fund action encompassing Autolus Therapeutics plc (NASDAQ:AUTL).

Hedge fund activity in Autolus Therapeutics plc (NASDAQ:AUTL)

At the end of September, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -46% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in AUTL over the last 21 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

Is AUTL A Good Stock To Buy?

More specifically, Baker Bros. Advisors was the largest shareholder of Autolus Therapeutics plc (NASDAQ:AUTL), with a stake worth $5.4 million reported as of the end of September. Trailing Baker Bros. Advisors was Cormorant Asset Management, which amassed a stake valued at $4.9 million. Alyeska Investment Group, Millennium Management, and Renaissance Technologies 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 Cormorant Asset Management allocated the biggest weight to Autolus Therapeutics plc (NASDAQ:AUTL), around 0.19% of its 13F portfolio. Burrage Capital Management is also relatively very bullish on the stock, dishing out 0.14 percent of its 13F equity portfolio to AUTL.

Because Autolus Therapeutics plc (NASDAQ:AUTL) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there is a sect of funds who sold off their entire stakes heading into Q4. It’s worth mentioning that Kamran Moghtaderi’s Eversept Partners sold off the biggest stake of all the hedgies followed by Insider Monkey, valued at about $4.1 million in stock, and Benjamin A. Smith’s Laurion Capital Management was right behind this move, as the fund sold off about $1.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 6 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Autolus Therapeutics plc (NASDAQ:AUTL) but similarly valued. We will take a look at First Bancorp (NASDAQ:FBNC), BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX), Zynex, Inc. (NASDAQ:ZYXI), Quanex Building Products Corporation (NYSE:NX), State Auto Financial Corporation (NASDAQ:STFC), iClick Interactive Asia Group Limited (NASDAQ:ICLK), and Relmada Therapeutics, Inc. (NASDAQ:RLMD). All of these stocks’ market caps resemble AUTL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FBNC 19 31045 2
BCRX 22 156967 -4
ZYXI 10 14599 1
NX 16 59379 2
STFC 8 7154 2
ICLK 13 23328 9
RLMD 8 123424 -3
Average 13.7 59414 1.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.7 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $15 million in AUTL’s case. BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) is the most popular stock in this table. On the other hand State Auto Financial Corporation (NASDAQ:STFC) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Autolus Therapeutics plc (NASDAQ:AUTL) is even less popular than STFC. Our overall hedge fund sentiment score for AUTL is 14. 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. Hedge funds dodged a bullet by taking a bearish stance towards AUTL. Our calculations showed that the top 20 most popular hedge fund stocks 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 but managed to beat the market again by 16 percentage points. Unfortunately AUTL wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); AUTL investors were disappointed as the stock returned -14.9% since the end of the third quarter (through 12/2) 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 so far in 2020.

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Disclosure: None. This article was originally published at Insider Monkey.