Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Aytu BioScience, Inc. (NASDAQ:AYTU) based on that data.
Aytu BioScience, Inc. (NASDAQ:AYTU) was in 5 hedge funds’ portfolios at the end of the first quarter of 2020. AYTU has experienced an increase in support from the world’s most elite money managers recently. There were 1 hedge funds in our database with AYTU positions at the end of the previous quarter. Our calculations also showed that AYTU isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 51 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Israel Englander of Millennium Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a peek at the key hedge fund action regarding Aytu BioScience, Inc. (NASDAQ:AYTU).
Hedge fund activity in Aytu BioScience, Inc. (NASDAQ:AYTU)
At Q1’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 400% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards AYTU over the last 18 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in Aytu BioScience, Inc. (NASDAQ:AYTU) was held by Renaissance Technologies, which reported holding $0.5 million worth of stock at the end of September. It was followed by Soleus Capital with a $0.2 million position. Other investors bullish on the company included Citadel Investment Group, ExodusPoint Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Soleus Capital allocated the biggest weight to Aytu BioScience, Inc. (NASDAQ:AYTU), around 0.24% of its 13F portfolio. ExodusPoint Capital is also relatively very bullish on the stock, designating 0.0033 percent of its 13F equity portfolio to AYTU.
Now, key hedge funds have jumped into Aytu BioScience, Inc. (NASDAQ:AYTU) headfirst. Renaissance Technologies, initiated the biggest position in Aytu BioScience, Inc. (NASDAQ:AYTU). Renaissance Technologies had $0.5 million invested in the company at the end of the quarter. Guy Levy’s Soleus Capital also initiated a $0.2 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Michael Gelband’s ExodusPoint Capital, and Israel Englander’s Millennium Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Aytu BioScience, Inc. (NASDAQ:AYTU) but similarly valued. We will take a look at DHI Group Inc. (NYSE:DHX), Marrone Bio Innovations Inc (NASDAQ:MBII), Vericity, Inc. (NASDAQ:VERY), and Matinas Biopharma Holdings, Inc. (NYSE:MTNB). This group of stocks’ market caps are similar to AYTU’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DHX | 15 | 30451 | -1 |
| MBII | 3 | 10002 | 1 |
| VERY | 1 | 688 | 0 |
| MTNB | 8 | 10819 | 1 |
| Average | 6.75 | 12990 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $1 million in AYTU’s case. DHI Group Inc. (NYSE:DHX) is the most popular stock in this table. On the other hand Vericity, Inc. (NASDAQ:VERY) is the least popular one with only 1 bullish hedge fund positions. Aytu BioScience, Inc. (NASDAQ:AYTU) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately AYTU wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); AYTU investors were disappointed as the stock returned -0.7% during the second 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.
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Disclosure: None. This article was originally published at Insider Monkey.
