Is SELB A Good Stock To Buy Now?

We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Selecta Biosciences, Inc. (NASDAQ:SELB) based on that data.

Is SELB a good stock to buy now? Selecta Biosciences, Inc. (NASDAQ:SELB) was in 18 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 21. SELB investors should be aware of a decrease in activity from the world’s largest hedge funds of late. There were 19 hedge funds in our database with SELB positions at the end of the second quarter. Our calculations also showed that SELB 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 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.


Israel Englander of Millennium Management

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 review the fresh hedge fund action encompassing Selecta Biosciences, Inc. (NASDAQ:SELB).

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

At third quarter’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards SELB over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is SELB A Good Stock To Buy?

The largest stake in Selecta Biosciences, Inc. (NASDAQ:SELB) was held by Biotechnology Value Fund / BVF Inc, which reported holding $21 million worth of stock at the end of September. It was followed by Mangrove Partners with a $9.5 million position. Other investors bullish on the company included Acuta Capital Partners, OrbiMed Advisors, and Millennium Management. In terms of the portfolio weights assigned to each position Acuta Capital Partners allocated the biggest weight to Selecta Biosciences, Inc. (NASDAQ:SELB), around 1.59% of its 13F portfolio. Mangrove Partners is also relatively very bullish on the stock, earmarking 1.2 percent of its 13F equity portfolio to SELB.

Due to the fact that Selecta Biosciences, Inc. (NASDAQ:SELB) has witnessed a decline in interest from the aggregate hedge fund industry, logic holds that there was a specific group of fund managers who were dropping their full holdings in the third quarter. At the top of the heap, Ken Greenberg and David Kim’s Ghost Tree Capital cut the biggest investment of all the hedgies tracked by Insider Monkey, valued at about $2.8 million in stock. D. E. Shaw’s fund, D E Shaw, also sold off its stock, about $0.4 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Selecta Biosciences, Inc. (NASDAQ:SELB). These stocks are Turtle Beach Corp (NASDAQ:HEAR), Citi Trends, Inc. (NASDAQ:CTRN), Agile Therapeutics Inc (NASDAQ:AGRX), NuCana plc (NASDAQ:NCNA), ORBCOMM Inc (NASDAQ:ORBC), Metacrine, Inc. (NASDAQ:MTCR), and Arbutus Biopharma Corp (NASDAQ:ABUS). This group of stocks’ market caps match SELB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HEAR 13 39126 0
CTRN 17 45754 4
AGRX 9 53501 -1
NCNA 8 23107 4
ORBC 13 49298 -6
MTCR 8 25031 8
ABUS 9 9749 1
Average 11 35081 1.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $63 million in SELB’s case. Citi Trends, Inc. (NASDAQ:CTRN) is the most popular stock in this table. On the other hand NuCana plc (NASDAQ:NCNA) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Selecta Biosciences, Inc. (NASDAQ:SELB) is more popular among hedge funds. Our overall hedge fund sentiment score for SELB is 79.7. 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 SELB as the stock returned 27% 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.

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