At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Protalix BioTherapeutics Inc. (NYSE:PLX).
Is Protalix BioTherapeutics Inc. (NYSE:PLX) a good stock to buy now? PLX has seen a decrease in enthusiasm from smart money of late. Protalix BioTherapeutics Inc. (NYSE:PLX) was in 3 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 7. Our calculations also showed that PLX 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 the eyes of most traders, hedge funds are assumed to be slow, old financial tools of the past. While there are over 8000 funds in operation at present, Our researchers hone in on the aristocrats of this group, approximately 850 funds. These investment experts control bulk of all hedge funds’ total capital, and by monitoring their first-class investments, Insider Monkey has revealed many investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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 10 most profitable companies in the world 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 analyze the fresh hedge fund action regarding Protalix BioTherapeutics Inc. (NYSE:PLX).
What does smart money think about Protalix BioTherapeutics Inc. (NYSE:PLX)?
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the second quarter of 2020. By comparison, 3 hedge funds held shares or bullish call options in PLX a year ago. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
More specifically, Highbridge Capital Management was the largest shareholder of Protalix BioTherapeutics Inc. (NYSE:PLX), with a stake worth $9.4 million reported as of the end of September. Trailing Highbridge Capital Management was Renaissance Technologies, which amassed a stake valued at $1.9 million. Arrowstreet Capital was 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 Highbridge Capital Management allocated the biggest weight to Protalix BioTherapeutics Inc. (NYSE:PLX), around 0.51% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.0019 percent of its 13F equity portfolio to PLX.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified PLX as a viable investment and initiated a position in the stock.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Protalix BioTherapeutics Inc. (NYSE:PLX) but similarly valued. We will take a look at Barnes & Noble Education Inc (NYSE:BNED), Citizens Holding Company (NASDAQ:CIZN), Target Hospitality Corp. (NASDAQ:TH), Tyme Technologies, Inc. (NASDAQ:TYME), VivoPower International PLC (NASDAQ:VVPR), Global Ship Lease, Inc. (NYSE:GSL), and Unity Bancorp, Inc. (NASDAQ:UNTY). This group of stocks’ market values are closest to PLX’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 5.7 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $11 million in PLX’s case. Target Hospitality Corp. (NASDAQ:TH) is the most popular stock in this table. On the other hand Citizens Holding Company (NASDAQ:CIZN) is the least popular one with only 1 bullish hedge fund positions. Protalix BioTherapeutics Inc. (NYSE:PLX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PLX is 25.2. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 28.1% in 2020 through November 23rd and surpassed the market again by 15.4 percentage points. Unfortunately PLX wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PLX investors were disappointed as the stock returned -0.8% since the end of September (through 11/23) 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.
Disclosure: None. This article was originally published at Insider Monkey.