Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Nabriva Therapeutics plc (NASDAQ:NBRV).
Is NBRV a good stock to buy now? Nabriva Therapeutics plc (NASDAQ:NBRV) investors should pay attention to an increase in support from the world’s most elite money managers in recent months. Nabriva Therapeutics plc (NASDAQ:NBRV) was in 10 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 12. There were 8 hedge funds in our database with NBRV positions at the end of the second quarter. Our calculations also showed that NBRV 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.
At the moment there are a lot of metrics stock traders employ to value their holdings. Two of the best metrics are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the best money managers can outpace the broader indices by a significant 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. With all of this in mind let’s take a look at the new hedge fund action regarding Nabriva Therapeutics plc (NASDAQ:NBRV).
Do Hedge Funds Think NBRV Is A Good Stock To Buy Now?
At third quarter’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in NBRV over the last 21 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Among these funds, Frazier Healthcare Partners held the most valuable stake in Nabriva Therapeutics plc (NASDAQ:NBRV), which was worth $2.3 million at the end of the third quarter. On the second spot was OrbiMed Advisors which amassed $1.4 million worth of shares. Rock Springs Capital Management, Winton Capital Management, and Sabby Capital 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 Frazier Healthcare Partners allocated the biggest weight to Nabriva Therapeutics plc (NASDAQ:NBRV), around 0.2% of its 13F portfolio. Sabby Capital is also relatively very bullish on the stock, designating 0.02 percent of its 13F equity portfolio to NBRV.
As one would reasonably expect, key money managers have jumped into Nabriva Therapeutics plc (NASDAQ:NBRV) headfirst. Sabby Capital, managed by Hal Mintz, established the biggest position in Nabriva Therapeutics plc (NASDAQ:NBRV). Sabby Capital had $0.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0 million investment in the stock during the quarter. The only other fund with a new position in the stock is Renaissance Technologies.
Let’s also examine hedge fund activity in other stocks similar to Nabriva Therapeutics plc (NASDAQ:NBRV). These stocks are Gevo, Inc. (NASDAQ:GEVO), Innodata Inc (NASDAQ:INOD), Aravive, Inc. (NASDAQ:ARAV), Northern Technologies International Corp (NASDAQ:NTIC), iMedia Brands, Inc. (NASDAQ:IMBI), Computer Task Group, Inc. (NASDAQ:CTG), and Core Molding Technologies, Inc. (NYSE:CMT). This group of stocks’ market valuations resemble NBRV’s market valuation.
|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 4.3 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $5 million in NBRV’s case. Aravive, Inc. (NASDAQ:ARAV) is the most popular stock in this table. On the other hand Innodata Inc (NASDAQ:INOD) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Nabriva Therapeutics plc (NASDAQ:NBRV) is more popular among hedge funds. Our overall hedge fund sentiment score for NBRV is 82. 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. Unfortunately NBRV wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on NBRV were disappointed as the stock returned -30.8% since the end of the third quarter (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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.