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 SCVX Corp. (NYSE:SCVX).
Is SCVX a good stock to buy now? Money managers were buying. The number of long hedge fund bets went up by 4 in recent months. SCVX Corp. (NYSE:SCVX) was in 17 hedge funds’ portfolios at the end of September. The all time high for this statistic is 14. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SCVX 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). There were 13 hedge funds in our database with SCVX positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a 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 let’s check out the recent hedge fund action regarding SCVX Corp. (NYSE:SCVX).
Do Hedge Funds Think SCVX Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 31% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in SCVX over the last 21 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Hudson Bay Capital Management, managed by Sander Gerber, holds the number one position in SCVX Corp. (NYSE:SCVX). Hudson Bay Capital Management has a $23.7 million position in the stock, comprising 0.4% of its 13F portfolio. On Hudson Bay Capital Management’s heels is Alec Litowitz and Ross Laser of Magnetar Capital, with a $12.1 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining peers that are bullish comprise Israel Englander’s Millennium Management, David Costen Haley’s HBK Investments and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Hudson Bay Capital Management allocated the biggest weight to SCVX Corp. (NYSE:SCVX), around 0.35% of its 13F portfolio. Owl Creek Asset Management is also relatively very bullish on the stock, setting aside 0.28 percent of its 13F equity portfolio to SCVX.
Now, key money managers have been driving this bullishness. Aristeia Capital, managed by Robert Henry Lynch, assembled the most valuable position in SCVX Corp. (NYSE:SCVX). Aristeia Capital had $1.5 million invested in the company at the end of the quarter. Paul Glazer’s Glazer Capital also made a $0.9 million investment in the stock during the quarter. The following funds were also among the new SCVX investors: Jeffrey Tannenbaum’s Fir Tree, Karim Abbadi and Edward McBride’s Centiva Capital, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Let’s check out hedge fund activity in other stocks similar to SCVX Corp. (NYSE:SCVX). We will take a look at Solaris Oilfield Infrastructure, Inc. (NYSE:SOI), Cassava Sciences, Inc. (NASDAQ:SAVA), DXP Enterprises Inc (NASDAQ:DXPE), Funko, Inc. (NASDAQ:FNKO), Peapack-Gladstone Financial Corp (NASDAQ:PGC), Affimed NV (NASDAQ:AFMD), and Aldeyra Therapeutics Inc (NASDAQ:ALDX). This group of stocks’ market valuations are similar to SCVX’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 12.7 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $80 million in SCVX’s case. Aldeyra Therapeutics Inc (NASDAQ:ALDX) is the most popular stock in this table. On the other hand Cassava Sciences, Inc. (NASDAQ:SAVA) is the least popular one with only 8 bullish hedge fund positions. SCVX Corp. (NYSE:SCVX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SCVX is 89. 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 positive signal but 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 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately SCVX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SCVX were disappointed as the stock returned 3.8% since the end of September (through 12/14) 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.