Is OncoSec Medical (ONCS) A Good Stock To Buy Now?

After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards OncoSec Medical Incorporated (NASDAQ:ONCS).

Is OncoSec Medical (ONCS) a good stock to buy now? ONCS investors should be aware of an increase in enthusiasm from smart money of late. OncoSec Medical Incorporated (NASDAQ:ONCS) was in 5 hedge funds’ portfolios at the end of September. The all time high for this statistics is 7. Our calculations also showed that ONCS 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.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

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. Now let’s go over the latest hedge fund action regarding OncoSec Medical Incorporated (NASDAQ:ONCS).

What have hedge funds been doing with OncoSec Medical Incorporated (NASDAQ:ONCS)?

At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 67% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ONCS over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in OncoSec Medical Incorporated (NASDAQ:ONCS) was held by Renaissance Technologies, which reported holding $1.4 million worth of stock at the end of September. It was followed by 683 Capital Partners with a $0.3 million position. Other investors bullish on the company included Two Sigma Advisors, Millennium Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position 683 Capital Partners allocated the biggest weight to OncoSec Medical Incorporated (NASDAQ:ONCS), around 0.02% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0014 percent of its 13F equity portfolio to ONCS.

As industrywide interest jumped, key hedge funds were breaking ground themselves. Two Sigma Advisors, managed by John Overdeck and David Siegel, initiated the most outsized position in OncoSec Medical Incorporated (NASDAQ:ONCS). Two Sigma Advisors had $0.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.1 million position during the quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as OncoSec Medical Incorporated (NASDAQ:ONCS) but similarly valued. We will take a look at Blue Ridge Bankshares, Inc. (NYSE:BRBS), Eyenovia, Inc. (NASDAQ:EYEN), NexPoint Real Estate Finance, Inc. (NYSE:NREF), China Customer Relations Centers, Inc. (NASDAQ:CCRC), electroCore, Inc. (NASDAQ:ECOR), Farmer Brothers Co. (NASDAQ:FARM), and Acme United Corporation (NYSE:ACU). All of these stocks’ market caps resemble ONCS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BRBS 2 1137 0
EYEN 6 3096 4
NREF 6 8047 1
CCRC 1 117 0
ECOR 2 311 -2
FARM 13 22129 -3
ACU 2 7700 0
Average 4.6 6077 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.6 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $2 million in ONCS’s case. Farmer Brothers Co. (NASDAQ:FARM) is the most popular stock in this table. On the other hand China Customer Relations Centers, Inc. (NASDAQ:CCRC) is the least popular one with only 1 bullish hedge fund positions. OncoSec Medical Incorporated (NASDAQ:ONCS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ONCS is 45.1. 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 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on ONCS as the stock returned 53.6% since the end of Q3 (through 11/27) 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.