Is AVROBIO, Inc. (AVRO) Going to Burn These Hedge Funds?

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like AVROBIO, Inc. (NASDAQ:AVRO).

AVROBIO, Inc. (NASDAQ:AVRO) was in 11 hedge funds’ portfolios at the end of the third quarter of 2019. AVRO shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. There were 9 hedge funds in our database with AVRO positions at the end of the previous quarter. 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 below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

At the moment there are a lot of signals shareholders put to use to appraise publicly traded companies. Some of the most underrated signals are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the top investment managers can outclass their index-focused peers by a superb amount (see the details here).

James Flynn Deerfield Management

James E. Flynn of Deerfield Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to analyze the fresh hedge fund action encompassing AVROBIO, Inc. (NASDAQ:AVRO).

How have hedgies been trading AVROBIO, Inc. (NASDAQ:AVRO)?

Heading into the fourth quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in AVRO a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in AVROBIO, Inc. (NASDAQ:AVRO) was held by Citadel Investment Group, which reported holding $23.8 million worth of stock at the end of September. It was followed by Farallon Capital with a $21.9 million position. Other investors bullish on the company included Tang Capital Management, Partner Fund Management, and Vivo Capital. In terms of the portfolio weights assigned to each position Tang Capital Management allocated the biggest weight to AVROBIO, Inc. (NASDAQ:AVRO), around 2% of its 13F portfolio. Vivo Capital is also relatively very bullish on the stock, setting aside 1.17 percent of its 13F equity portfolio to AVRO.

As industrywide interest jumped, some big names were breaking ground themselves. Tang Capital Management, managed by Kevin C. Tang, assembled the most outsized position in AVROBIO, Inc. (NASDAQ:AVRO). Tang Capital Management had $11.7 million invested in the company at the end of the quarter. Albert Cha and Frank Kung’s Vivo Capital also made a $10.3 million investment in the stock during the quarter. The other funds with new positions in the stock are James E. Flynn’s Deerfield Management, Stephen DuBois’s Camber Capital Management, and Phill Gross and Robert Atchinson’s Adage Capital Management.

Let’s go over hedge fund activity in other stocks similar to AVROBIO, Inc. (NASDAQ:AVRO). We will take a look at NACCO Industries, Inc. (NYSE:NC), Village Farms International, Inc. (NASDAQ:VFF), Heritage Insurance Holdings Inc (NYSE:HRTG), and Oxford Immunotec Global PLC (NASDAQ:OXFD). All of these stocks’ market caps are closest to AVRO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NC 11 23595 2
VFF 5 4688 1
HRTG 9 48243 -5
OXFD 19 194524 3
Average 11 67763 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $117 million in AVRO’s case. Oxford Immunotec Global PLC (NASDAQ:OXFD) is the most popular stock in this table. On the other hand Village Farms International, Inc. (NASDAQ:VFF) is the least popular one with only 5 bullish hedge fund positions. AVROBIO, Inc. (NASDAQ:AVRO) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on AVRO as the stock returned 13.6% during the first two months of Q4 and outperformed the market by an even larger margin.

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