How do we determine whether Cellectis SA (NASDAQ:CLLS) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Cellectis SA (NASDAQ:CLLS) has experienced a decrease in activity from the world’s largest hedge funds lately. Our calculations also showed that CLLS isn’t among the 30 most popular stocks among hedge funds.
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 market by 32 percentage points since May 2014 through March 12, 2019 (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 our short portfolio.
We’re going to go over the recent hedge fund action regarding Cellectis SA (NASDAQ:CLLS).
Hedge fund activity in Cellectis SA (NASDAQ:CLLS)
At the end of the fourth quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of -38% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in CLLS over the last 14 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Adage Capital Management was the largest shareholder of Cellectis SA (NASDAQ:CLLS), with a stake worth $10 million reported as of the end of December. Trailing Adage Capital Management was Armistice Capital, which amassed a stake valued at $9.8 million. Point72 Asset Management, Rubric Capital Management, and Water Street Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Cellectis SA (NASDAQ:CLLS) has faced declining sentiment from hedge fund managers, it’s easy to see that there is a sect of fund managers who sold off their positions entirely last quarter. Interestingly, Benjamin A. Smith’s Laurion Capital Management dumped the largest position of the “upper crust” of funds tracked by Insider Monkey, totaling about $3.8 million in stock. James A. Silverman’s fund, Opaleye Management, also cut its stock, about $3.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 5 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Cellectis SA (NASDAQ:CLLS) but similarly valued. We will take a look at Maxar Technologies Ltd. (NYSE:MAXR), Chico’s FAS, Inc. (NYSE:CHS), Allegiance Bancshares, Inc. (NASDAQ:ABTX), and Opus Bank (NASDAQ:OPB). This group of stocks’ market values are similar to CLLS’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 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $34 million in CLLS’s case. Chico’s FAS, Inc. (NYSE:CHS) is the most popular stock in this table. On the other hand Allegiance Bancshares, Inc. (NASDAQ:ABTX) is the least popular one with only 6 bullish hedge fund positions. Cellectis SA (NASDAQ:CLLS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on CLLS, though not to the same extent, as the stock returned 22.2% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.