The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded AVROBIO, Inc. (NASDAQ:AVRO) based on those filings.
Is AVRO a good stock to buy now? AVROBIO, Inc. (NASDAQ:AVRO) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 17 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that AVRO 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). 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 Golden Star Resources Ltd. (NYSE:GSS), Myers Industries, Inc. (NYSE:MYE), and Shoe Carnival, Inc. (NASDAQ:SCVL) to gather more data points.
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.
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 let’s take a look at the fresh hedge fund action encompassing AVROBIO, Inc. (NASDAQ:AVRO).
Do Hedge Funds Think AVRO Is A Good Stock To Buy Now?
At the end of September, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in AVRO a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Citadel Investment Group held the most valuable stake in AVROBIO, Inc. (NASDAQ:AVRO), which was worth $23.9 million at the end of the third quarter. On the second spot was Camber Capital Management which amassed $23.4 million worth of shares. Farallon Capital, OrbiMed Advisors, and Holocene Advisors 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 Tang Capital Management allocated the biggest weight to AVROBIO, Inc. (NASDAQ:AVRO), around 1.65% of its 13F portfolio. Camber Capital Management is also relatively very bullish on the stock, setting aside 1.24 percent of its 13F equity portfolio to AVRO.
Seeing as AVROBIO, Inc. (NASDAQ:AVRO) has experienced bearish sentiment from hedge fund managers, it’s safe to say that there was a specific group of fund managers that decided to sell off their positions entirely by the end of the third quarter. Intriguingly, Brian Ashford-Russell and Tim Woolley’s Polar Capital sold off the largest stake of all the hedgies watched by Insider Monkey, comprising an estimated $4.3 million in stock, and Christiana Goh Bardon’s Burrage Capital Management was right behind this move, as the fund cut about $3.9 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to AVROBIO, Inc. (NASDAQ:AVRO). These stocks are Golden Star Resources Ltd. (NYSE:GSS), Myers Industries, Inc. (NYSE:MYE), Shoe Carnival, Inc. (NASDAQ:SCVL), Dynavax Technologies Corporation (NASDAQ:DVAX), HarborOne Bancorp, Inc. (NASDAQ:HONE), Talos Energy, Inc. (NYSE:TALO), and Ardelyx Inc (NASDAQ:ARDX). All of these stocks’ market caps are similar to AVRO’s market cap.
|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 14.7 hedge funds with bullish positions and the average amount invested in these stocks was $62 million. That figure was $122 million in AVRO’s case. Dynavax Technologies Corporation (NASDAQ:DVAX) is the most popular stock in this table. On the other hand Golden Star Resources Ltd. (NYSE:GSS) is the least popular one with only 6 bullish hedge fund positions. AVROBIO, Inc. (NASDAQ:AVRO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AVRO is 64.2. 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 AVRO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AVRO were disappointed as the stock returned 3.7% 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.
Disclosure: None. This article was originally published at Insider Monkey.