Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS)? The smart money sentiment can provide an answer to this question.
Is PIRS a good stock to buy now? Investors who are in the know were getting less optimistic. The number of long hedge fund positions retreated by 6 recently. Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) was in 15 hedge funds’ portfolios at the end of September. The all time high for this statistic is 21. Our calculations also showed that PIRS 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.
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 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 analyze the latest hedge fund action regarding Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS).
Do Hedge Funds Think PIRS Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PIRS over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mark Lampert’s Biotechnology Value Fund / BVF Inc has the number one position in Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS), worth close to $11.4 million, amounting to 0.6% of its total 13F portfolio. The second most bullish fund manager is Aquilo Capital Management, managed by Marc Schneidman, which holds a $7.6 million position; 0.8% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism encompass Renaissance Technologies, Michael Rockefeller and KarláKroeker’s Woodline Partners and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Aquilo Capital Management allocated the biggest weight to Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS), around 0.81% of its 13F portfolio. Biotechnology Value Fund / BVF Inc is also relatively very bullish on the stock, dishing out 0.62 percent of its 13F equity portfolio to PIRS.
Because Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few funds that decided to sell off their entire stakes last quarter. At the top of the heap, Srini Akkaraju and Michael Dybbs’s Samsara BioCapital dumped the largest investment of all the hedgies tracked by Insider Monkey, valued at about $5.2 million in stock, and Greg Martinez’s Parkman Healthcare Partners was right behind this move, as the fund said goodbye to about $1.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS). We will take a look at C&F Financial Corp (NASDAQ:CFFI), Clipper Realty Inc. (NYSE:CLPR), Everspin Technologies, Inc. (NASDAQ:MRAM), Alaska Communications Systems Group Inc (NASDAQ:ALSK), BankFinancial Corporation (NASDAQ:BFIN), Reading International Inc (NASDAQ:RDIB), and Reading International, Inc. (NASDAQ:RDI). All of these stocks’ market caps resemble PIRS’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 5.4 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $32 million in PIRS’s case. Clipper Realty Inc. (NYSE:CLPR) is the most popular stock in this table. On the other hand Reading International Inc (NASDAQ:RDIB) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) is more popular among hedge funds. Our overall hedge fund sentiment score for PIRS is 70.4. 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 returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on PIRS as the stock returned 29% since the end of September (through 12/14) 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.
Disclosure: None. This article was originally published at Insider Monkey.