Is Evofem Biosciences, Inc. (NASDAQ:EVFM) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is EVFM a good stock to buy now? Evofem Biosciences, Inc. (NASDAQ:EVFM) has experienced a decrease in hedge fund interest in recent months. Evofem Biosciences, Inc. (NASDAQ:EVFM) was in 11 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 15. Our calculations also showed that EVFM 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely 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 15 best blue chip stocks 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 let’s take a peek at the new hedge fund action surrounding Evofem Biosciences, Inc. (NASDAQ:EVFM).
Do Hedge Funds Think EVFM Is A Good Stock To Buy Now?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -27% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EVFM over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Hound Partners held the most valuable stake in Evofem Biosciences, Inc. (NASDAQ:EVFM), which was worth $2.4 million at the end of the third quarter. On the second spot was Baker Bros. Advisors which amassed $1 million worth of shares. Prosight Capital, Pentwater Capital Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Prosight Capital allocated the biggest weight to Evofem Biosciences, Inc. (NASDAQ:EVFM), around 0.28% of its 13F portfolio. Hound Partners is also relatively very bullish on the stock, designating 0.17 percent of its 13F equity portfolio to EVFM.
Seeing as Evofem Biosciences, Inc. (NASDAQ:EVFM) has faced bearish sentiment from the smart money, we can see that there was a specific group of money managers who were dropping their entire stakes in the third quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP dumped the largest stake of the 750 funds watched by Insider Monkey, worth about $6.7 million in stock, and Anand Parekh’s Alyeska Investment Group was right behind this move, as the fund sold off about $1.7 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 4 funds in the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Evofem Biosciences, Inc. (NASDAQ:EVFM) but similarly valued. These stocks are Callon Petroleum Company (NYSE:CPE), RGC Resources, Inc. (NASDAQ:RGCO), MVB Financial Corp. (NASDAQ:MVBF), General Finance Corporation (NASDAQ:GFN), Atlanticus Holdings Corp (NASDAQ:ATLC), Great Ajax Corp (NYSE:AJX), and North American Construction Group Ltd. (NYSE:NOA). This group of stocks’ market caps resemble EVFM’s market cap.
|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 3.9 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $5 million in EVFM’s case. North American Construction Group Ltd. (NYSE:NOA) is the most popular stock in this table. On the other hand RGC Resources, Inc. (NASDAQ:RGCO) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Evofem Biosciences, Inc. (NASDAQ:EVFM) is more popular among hedge funds. Our overall hedge fund sentiment score for EVFM is 73. 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. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Unfortunately EVFM wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on EVFM were disappointed as the stock returned -7.2% since the end of the third quarter (through 12/8) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.