The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Mesoblast Limited (NASDAQ:MESO) based on those filings.
Is Mesoblast Limited (NASDAQ:MESO) a buy right now? The best stock pickers are taking an optimistic view. The number of bullish hedge fund bets went up by 3 in recent months. Our calculations also showed that MESO 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). MESO was in 4 hedge funds’ portfolios at the end of March. There were 1 hedge funds in our database with MESO positions at the end of the previous quarter.
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 44 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s view the new hedge fund action surrounding Mesoblast Limited (NASDAQ:MESO).
What does smart money think about Mesoblast Limited (NASDAQ:MESO)?
Heading into the second quarter of 2020, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 300% from the previous quarter. On the other hand, there were a total of 1 hedge funds with a bullish position in MESO a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Renaissance Technologies has the largest position in Mesoblast Limited (NASDAQ:MESO), worth close to $0.9 million, amounting to less than 0.1%% of its total 13F portfolio. The second largest stake is held by Israel Englander of Millennium Management, with a $0.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other professional money managers that hold long positions include Paul Marshall and Ian Wace’s Marshall Wace LLP, Ken Griffin’s Citadel Investment Group and . In terms of the portfolio weights assigned to each position Marshall Wace LLP allocated the biggest weight to Mesoblast Limited (NASDAQ:MESO), around 0.0011% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0009 percent of its 13F equity portfolio to MESO.
As aggregate interest increased, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, initiated the largest position in Mesoblast Limited (NASDAQ:MESO). Millennium Management had $0.2 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $0.1 million investment in the stock during the quarter. The only other fund with a new position in the stock is Ken Griffin’s Citadel Investment Group.
Let’s also examine hedge fund activity in other stocks similar to Mesoblast Limited (NASDAQ:MESO). We will take a look at Boingo Wireless Inc (NASDAQ:WIFI), Dorian LPG Ltd (NYSE:LPG), Winmark Corporation (NASDAQ:WINA), and Veeco Instruments Inc. (NASDAQ:VECO). This group of stocks’ market values are closest to MESO’s market value.
|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 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $143 million. That figure was $1 million in MESO’s case. Dorian LPG Ltd (NYSE:LPG) is the most popular stock in this table. On the other hand Winmark Corporation (NASDAQ:WINA) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Mesoblast Limited (NASDAQ:MESO) is even less popular than WINA. Hedge funds clearly dropped the ball on MESO as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on MESO as the stock returned 192.9% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.