Is HBIO A Good Stock To Buy Now?

While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Harvard Bioscience, Inc. (NASDAQ:HBIO).

Is HBIO a good stock to buy now? Hedge fund interest in Harvard Bioscience, Inc. (NASDAQ:HBIO) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that HBIO 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 MDC Partners Inc. (NASDAQ:MDCA), Lantern Pharma Inc. (NASDAQ:LTRN), and Bank of Commerce Holdings (NASDAQ:BOCH) 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.


Ken Griffin of Citadel Investment Group

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 take a glance at the latest hedge fund action surrounding Harvard Bioscience, Inc. (NASDAQ:HBIO).

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

Heading into the fourth quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in HBIO a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is HBIO A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates has the most valuable position in Harvard Bioscience, Inc. (NASDAQ:HBIO), worth close to $4.8 million, corresponding to 0.1% of its total 13F portfolio. On Royce & Associates’s heels is Renaissance Technologies, holding a $3.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism encompass George McCabe’s Portolan Capital Management, Constantinos J. Christofilis’s Archon Capital Management and Jeffrey Moskowitz’s Harvey Partners. In terms of the portfolio weights assigned to each position Harvey Partners allocated the biggest weight to Harvard Bioscience, Inc. (NASDAQ:HBIO), around 3.09% of its 13F portfolio. Archon Capital Management is also relatively very bullish on the stock, dishing out 0.53 percent of its 13F equity portfolio to HBIO.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. 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 only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Bailard Inc).

Let’s now take a look at hedge fund activity in other stocks similar to Harvard Bioscience, Inc. (NASDAQ:HBIO). We will take a look at MDC Partners Inc. (NASDAQ:MDCA), Lantern Pharma Inc. (NASDAQ:LTRN), Bank of Commerce Holdings (NASDAQ:BOCH), Kirkland’s, Inc. (NASDAQ:KIRK), Pangaea Logistics Solutions, Ltd. (NASDAQ:PANL), Chico’s FAS, Inc. (NYSE:CHS), and Republic First Bancorp, Inc. (NASDAQ:FRBK). This group of stocks’ market caps resemble HBIO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MDCA 11 28165 -2
LTRN 1 661 1
BOCH 5 6817 -1
KIRK 11 29293 4
PANL 1 240 0
CHS 12 23731 -4
FRBK 5 2577 -2
Average 6.6 13069 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.6 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $18 million in HBIO’s case. Chico’s FAS, Inc. (NYSE:CHS) 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. Harvard Bioscience, Inc. (NASDAQ:HBIO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HBIO is 80.7. 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. Hedge funds were also right about betting on HBIO as the stock returned 40.9% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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