Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Bellicum Pharmaceuticals Inc (NASDAQ:BLCM)? The smart money sentiment can provide an answer to this question.
Bellicum Pharmaceuticals Inc (NASDAQ:BLCM) was in 3 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 17. BLCM investors should be aware of a decrease in support from the world’s most elite money managers of late. There were 4 hedge funds in our database with BLCM positions at the end of the second quarter. Our calculations also showed that BLCM 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 a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a 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 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. Keeping this in mind we’re going to take a peek at the latest hedge fund action surrounding Bellicum Pharmaceuticals Inc (NASDAQ:BLCM).
What does smart money think about Bellicum Pharmaceuticals Inc (NASDAQ:BLCM)?
At third quarter’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BLCM over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Julian Baker and Felix Baker’s Baker Bros. Advisors has the most valuable position in Bellicum Pharmaceuticals Inc (NASDAQ:BLCM), worth close to $1.6 million, corresponding to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, managed by Jim Simons (founder), which holds a $1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Frazier Healthcare Partners allocated the biggest weight to Bellicum Pharmaceuticals Inc (NASDAQ:BLCM), around 0.06% of its 13F portfolio. Baker Bros. Advisors is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to BLCM.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Sio Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified BLCM as a viable investment and initiated a position in the stock.
Let’s also examine hedge fund activity in other stocks similar to Bellicum Pharmaceuticals Inc (NASDAQ:BLCM). These stocks are Taylor Devices, Inc. (NASDAQ:TAYD), U.S. Gold Corp. (NASDAQ:USAU), Kintara Therapeutics, Inc. (NASDAQ:KTRA), Unique Fabricating Inc (NYSE:UFAB), Cellectar Biosciences, Inc. (NASDAQ:CLRB), Annovis Bio, Inc. (NYSE:ANVS), and SeaChange International, Inc. (NASDAQ:SEAC). This group of stocks’ market values are closest to BLCM’s market value.
|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 2.9 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $3 million in BLCM’s case. SeaChange International, Inc. (NASDAQ:SEAC) is the most popular stock in this table. On the other hand U.S. Gold Corp. (NASDAQ:USAU) is the least popular one with only 1 bullish hedge fund positions. Bellicum Pharmaceuticals Inc (NASDAQ:BLCM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BLCM is 23.6. 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 28.1% in 2020 through November 23rd and beat the market again by 15.4 percentage points. Unfortunately BLCM wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BLCM were disappointed as the stock returned -53.9% since the end of September (through 11/23) 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.