Is GNCA A Good Stock To Buy Now?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Genocea Biosciences Inc (NASDAQ:GNCA).

Is GNCA a good stock to buy now? GNCA shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds’ portfolios at the end of September. Our calculations also showed that GNCA 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). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Kopin Corporation (NASDAQ:KOPN), Harvard Bioscience, Inc. (NASDAQ:HBIO), and MDC Partners Inc. (NASDAQ:MDCA) to gather more data points.

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.

David Siegel of Two Sigma Advisors

David Siegel of Two Sigma Advisors

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 we’re going to analyze the key hedge fund action regarding Genocea Biosciences Inc (NASDAQ:GNCA).

Do Hedge Funds Think GNCA Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GNCA over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is GNCA A Good Stock To Buy?

The largest stake in Genocea Biosciences Inc (NASDAQ:GNCA) was held by Avoro Capital Advisors (venBio Select Advisor), which reported holding $11.6 million worth of stock at the end of September. It was followed by Biotechnology Value Fund / BVF Inc with a $9.2 million position. Other investors bullish on the company included Citadel Investment Group, Kingdon Capital, and Sabby Capital. In terms of the portfolio weights assigned to each position Biotechnology Value Fund / BVF Inc allocated the biggest weight to Genocea Biosciences Inc (NASDAQ:GNCA), around 0.5% of its 13F portfolio. Kingdon Capital is also relatively very bullish on the stock, setting aside 0.18 percent of its 13F equity portfolio to GNCA.

Due to the fact that Genocea Biosciences Inc (NASDAQ:GNCA) has experienced a decline in interest from the aggregate hedge fund industry, we can see that there exists a select few funds that elected to cut their positions entirely heading into Q4. It’s worth mentioning that Nathan Fischel’s DAFNA Capital Management dropped the largest stake of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $1.2 million in stock. Vishal Saluja and Pham Quang’s fund, Endurant Capital Management, also sold off its stock, about $0.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks similar to Genocea Biosciences Inc (NASDAQ:GNCA). These stocks are Kopin Corporation (NASDAQ:KOPN), Harvard Bioscience, Inc. (NASDAQ:HBIO), MDC Partners Inc. (NASDAQ:MDCA), Lantern Pharma Inc. (NASDAQ:LTRN), Bank of Commerce Holdings (NASDAQ:BOCH), Kirkland’s, Inc. (NASDAQ:KIRK), and Pangaea Logistics Solutions, Ltd. (NASDAQ:PANL). This group of stocks’ market valuations match GNCA’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KOPN 2 2588 -1
HBIO 12 18011 0
MDCA 11 28165 -2
LTRN 1 661 1
BOCH 5 6817 -1
KIRK 11 29293 4
PANL 1 240 0
Average 6.1 12254 0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.1 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $28 million in GNCA’s case. Harvard Bioscience, Inc. (NASDAQ:HBIO) is the most popular stock in this table. On the other hand Lantern Pharma Inc. (NASDAQ:LTRN) is the least popular one with only 1 bullish hedge fund positions. Genocea Biosciences Inc (NASDAQ:GNCA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GNCA is 67.3. 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 32.9% in 2020 through December 8th and beat the market again by 16.2 percentage points. Unfortunately GNCA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GNCA were disappointed as the stock returned -4.4% since the end of September (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 many of these stocks already outperformed the market so far this year.

Follow Genocea Biosciences Inc. (NASDAQ:GNCA)

Disclosure: None. This article was originally published at Insider Monkey.