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 Lineage Cell Therapeutics, Inc. (NYSE:LCTX).
Is Lineage Cell Therapeutics (LCTX) a good stock to buy now? LCTX was in 8 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 13. LCTX has seen a decrease in enthusiasm from smart money of late. There were 12 hedge funds in our database with LCTX positions at the end of the second quarter. Our calculations also showed that LCTX 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.
In today’s marketplace there are tons of methods stock market investors use to analyze stocks. A duo of the less utilized methods are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can beat the S&P 500 by a healthy margin (see the details here).
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 gander at the recent hedge fund action encompassing Lineage Cell Therapeutics, Inc. (NYSE:LCTX).
How are hedge funds trading Lineage Cell Therapeutics, Inc. (NYSE:LCTX)?
At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -33% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in LCTX over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, Broadwood Capital was the largest shareholder of Lineage Cell Therapeutics, Inc. (NYSE:LCTX), with a stake worth $31.8 million reported as of the end of September. Trailing Broadwood Capital was Renaissance Technologies, which amassed a stake valued at $0.4 million. Millennium Management, Two Sigma Advisors, and DAFNA 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 Broadwood Capital allocated the biggest weight to Lineage Cell Therapeutics, Inc. (NYSE:LCTX), around 2.5% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, dishing out 0.03 percent of its 13F equity portfolio to LCTX.
Judging by the fact that Lineage Cell Therapeutics, Inc. (NYSE:LCTX) has experienced declining sentiment from hedge fund managers, logic holds that there exists a select few money managers that slashed their entire stakes by the end of the third quarter. Interestingly, Donald Sussman’s Paloma Partners said goodbye to the biggest investment of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $0.2 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund sold off about $0.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 4 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Lineage Cell Therapeutics, Inc. (NYSE:LCTX). We will take a look at Educational Development Corporation (NASDAQ:EDUC), Equillium, Inc. (NASDAQ:EQ), Penns Woods Bancorp, Inc. (NASDAQ:PWOD), Western Copper and Gold Corporation (NYSE:WRN), Investar Holding Corporation (NASDAQ:ISTR), Celyad Oncology SA (NASDAQ:CYAD), and MVC Capital, Inc. (NYSE:MVC). This group of stocks’ market caps are closest to LCTX’s market cap.
|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 3.7 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $33 million in LCTX’s case. MVC Capital, Inc. (NYSE:MVC) is the most popular stock in this table. On the other hand Penns Woods Bancorp, Inc. (NASDAQ:PWOD) is the least popular one with only 1 bullish hedge fund positions. Lineage Cell Therapeutics, Inc. (NYSE:LCTX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LCTX is 69.5. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on LCTX as the stock returned 61.7% since the end of Q3 (through 12/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.