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 March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded CEL-SCI Corporation (NYSE:CVM) based on those filings.
Hedge fund interest in CEL-SCI Corporation (NYSE:CVM) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare CVM to other stocks including Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA), PBF Logistics LP (NYSE:PBFX), and Geopark Ltd (NYSE:GPRK) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 58 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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. With all of this in mind let’s view the new hedge fund action encompassing CEL-SCI Corporation (NYSE:CVM).
What have hedge funds been doing with CEL-SCI Corporation (NYSE:CVM)?
Heading into the second quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in CVM over the last 18 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, D. E. Shaw’s D E Shaw has the number one position in CEL-SCI Corporation (NYSE:CVM), worth close to $9.3 million, comprising less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, led by Ken Griffin, holding a $2.1 million call position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish encompass Hal Mintz’s Sabby Capital, Cliff Asness’s AQR Capital Management and William C. Martin’s Raging Capital Management. In terms of the portfolio weights assigned to each position Sabby Capital allocated the biggest weight to CEL-SCI Corporation (NYSE:CVM), around 0.26% of its 13F portfolio. Raging Capital Management is also relatively very bullish on the stock, earmarking 0.23 percent of its 13F equity portfolio to CVM.
Due to the fact that CEL-SCI Corporation (NYSE:CVM) has faced falling interest from the smart money, logic holds that there were a few funds who were dropping their positions entirely by the end of the first quarter. Intriguingly, Peter S. Park’s Park West Asset Management dropped the largest investment of the “upper crust” of funds followed by Insider Monkey, comprising about $0.5 million in stock, and Renaissance Technologies was right behind this move, as the fund dropped about $0.4 million worth. These moves are interesting, as aggregate 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 CEL-SCI Corporation (NYSE:CVM). These stocks are Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA), PBF Logistics LP (NYSE:PBFX), Geopark Ltd (NYSE:GPRK), and ProSight Global, Inc. (NYSE:PROS). This group of stocks’ market caps are closest to CVM’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 8 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $11 million in CVM’s case. Geopark Ltd (NYSE:GPRK) is the most popular stock in this table. On the other hand PBF Logistics LP (NYSE:PBFX) is the least popular one with only 3 bullish hedge fund positions. CEL-SCI Corporation (NYSE:CVM) 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 CVM wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CVM investors were disappointed as the stock returned 15.5% 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.
Disclosure: None. This article was originally published at Insider Monkey.