Is PRVB A Good Stock To Buy Now?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Provention Bio, Inc. (NASDAQ:PRVB).

Is PRVB a good stock to buy now? Provention Bio, Inc. (NASDAQ:PRVB) investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. Provention Bio, Inc. (NASDAQ:PRVB) was in 10 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 14. Our calculations also showed that PRVB 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In the eyes of most shareholders, hedge funds are viewed as unimportant, outdated financial vehicles of years past. While there are more than 8000 funds in operation at present, Our experts look at the crème de la crème of this group, about 850 funds. These investment experts shepherd the majority of the smart money’s total capital, and by tailing their matchless equity investments, Insider Monkey has uncovered various investment strategies that have historically outrun the broader indices. Insider Monkey’s flagship short hedge fund strategy outperformed 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 .

Joseph Edelman of Perceptive Advisors

Joseph Edelman of Perceptive 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. With all of this in mind we’re going to take a peek at the key hedge fund action surrounding Provention Bio, Inc. (NASDAQ:PRVB).

Do Hedge Funds Think PRVB Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from the previous quarter. On the other hand, there were a total of 8 hedge funds with a bullish position in PRVB a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

More specifically, Perceptive Advisors was the largest shareholder of Provention Bio, Inc. (NASDAQ:PRVB), with a stake worth $54.7 million reported as of the end of September. Trailing Perceptive Advisors was 683 Capital Partners, which amassed a stake valued at $11 million. Two Sigma Advisors, DG Capital Management, and Millennium Management 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 DG Capital Management allocated the biggest weight to Provention Bio, Inc. (NASDAQ:PRVB), around 3.22% of its 13F portfolio. Soleus Capital is also relatively very bullish on the stock, setting aside 0.95 percent of its 13F equity portfolio to PRVB.

Because Provention Bio, Inc. (NASDAQ:PRVB) has faced bearish sentiment from hedge fund managers, logic holds that there lies a certain “tier” of hedgies that elected to cut their entire stakes in the third quarter. Intriguingly, Greg Eisner’s Engineers Gate Manager dropped the biggest investment of all the hedgies tracked by Insider Monkey, worth an estimated $0.7 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also cut its stock, about $0.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds in the third quarter.

Let’s go over hedge fund activity in other stocks similar to Provention Bio, Inc. (NASDAQ:PRVB). We will take a look at Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY), XPEL Inc. (NASDAQ:XPEL), Protagonist Therapeutics, Inc. (NASDAQ:PTGX), Cohu, Inc. (NASDAQ:COHU), German American Bancorp., Inc. (NASDAQ:GABC), Collegium Pharmaceutical Inc (NASDAQ:COLL), and Ranpak Holdings Corp (NYSE:PACK). This group of stocks’ market valuations are similar to PRVB’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PLAY 16 202166 4
XPEL 12 16036 8
PTGX 13 276569 2
COHU 8 47643 -4
GABC 4 12514 0
COLL 17 227881 -3
PACK 14 317636 0
Average 12 157206 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $157 million. That figure was $84 million in PRVB’s case. Collegium Pharmaceutical Inc (NASDAQ:COLL) is the most popular stock in this table. On the other hand German American Bancorp., Inc. (NASDAQ:GABC) is the least popular one with only 4 bullish hedge fund positions. Provention Bio, Inc. (NASDAQ:PRVB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PRVB is 45.5. 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. A small number of hedge funds were also right about betting on PRVB as the stock returned 30.3% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.