Is Immunomedics, Inc. (IMMU) Going to Burn These Hedge Funds?

In this article you are going to find out whether hedge funds think Immunomedics, Inc. (NASDAQ:IMMU) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Immunomedics, Inc. (NASDAQ:IMMU) was in 27 hedge funds’ portfolios at the end of March. IMMU shareholders have witnessed a decrease in enthusiasm from smart money lately. There were 28 hedge funds in our database with IMMU holdings at the end of the previous quarter. Our calculations also showed that IMMU isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

According to most market participants, hedge funds are assumed to be slow, old investment tools of the past. While there are more than 8000 funds trading at the moment, Our researchers look at the bigwigs of this group, around 850 funds. Most estimates calculate that this group of people manage the majority of the hedge fund industry’s total capital, and by watching their unrivaled equity investments, Insider Monkey has determined a number of investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

William Leland Edwards of Palo Alto Investors

William Leland Edwards of Palo Alto Investors

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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. Now let’s analyze the new hedge fund action encompassing Immunomedics, Inc. (NASDAQ:IMMU).

Hedge fund activity in Immunomedics, Inc. (NASDAQ:IMMU)

Heading into the second quarter of 2020, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in IMMU a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

More specifically, Avoro Capital Advisors (venBio Select Advisor) was the largest shareholder of Immunomedics, Inc. (NASDAQ:IMMU), with a stake worth $330.3 million reported as of the end of September. Trailing Avoro Capital Advisors (venBio Select Advisor) was Palo Alto Investors, which amassed a stake valued at $71.3 million. Deerfield Management, Point72 Asset Management, and Alkeon Capital Management 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 Avoro Capital Advisors (venBio Select Advisor) allocated the biggest weight to Immunomedics, Inc. (NASDAQ:IMMU), around 11.15% of its 13F portfolio. Foresite Capital is also relatively very bullish on the stock, earmarking 8.59 percent of its 13F equity portfolio to IMMU.

Since Immunomedics, Inc. (NASDAQ:IMMU) has faced declining sentiment from the aggregate hedge fund industry, logic holds that there exists a select few fund managers that slashed their positions entirely last quarter. Intriguingly, Renaissance Technologies dumped the largest position of all the hedgies watched by Insider Monkey, comprising an estimated $10.7 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also dumped its stock, about $6.3 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Immunomedics, Inc. (NASDAQ:IMMU) but similarly valued. We will take a look at Pinnacle Financial Partners, Inc. (NASDAQ:PNFP), Millicom International Cellular S.A. (NASDAQ:TIGO), Clean Harbors Inc (NYSE:CLH), and Stifel Financial Corp. (NYSE:SF). This group of stocks’ market valuations match IMMU’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PNFP 13 32487 -3
TIGO 7 52524 0
CLH 25 244225 1
SF 17 106242 2
Average 15.5 108870 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $109 million. That figure was $701 million in IMMU’s case. Clean Harbors Inc (NYSE:CLH) is the most popular stock in this table. On the other hand Millicom International Cellular S.A. (NASDAQ:TIGO) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Immunomedics, Inc. (NASDAQ:IMMU) is more popular among hedge funds. 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 returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on IMMU as the stock returned 149.2% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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