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 SIGA Technologies Inc. (NASDAQ:SIGA).
Is SIGA a good stock to buy now? The best stock pickers were turning bullish. The number of bullish hedge fund positions rose by 5 recently. SIGA Technologies Inc. (NASDAQ:SIGA) was in 16 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 16. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SIGA 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. Now let’s go over the fresh hedge fund action regarding SIGA Technologies Inc. (NASDAQ:SIGA).
Do Hedge Funds Think SIGA Is A Good Stock To Buy Now?
At Q3’s end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 45% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in SIGA a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, AltraVue Capital held the most valuable stake in SIGA Technologies Inc. (NASDAQ:SIGA), which was worth $13.1 million at the end of the third quarter. On the second spot was Jet Capital Investors which amassed $11.3 million worth of shares. MFP Investors, Nantahala Capital Management, and Arrowstreet Capital 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 AltraVue Capital allocated the biggest weight to SIGA Technologies Inc. (NASDAQ:SIGA), around 7.7% of its 13F portfolio. Jet Capital Investors is also relatively very bullish on the stock, earmarking 2.69 percent of its 13F equity portfolio to SIGA.
As aggregate interest increased, some big names were leading the bulls’ herd. Millennium Management, managed by Israel Englander, initiated the most valuable position in SIGA Technologies Inc. (NASDAQ:SIGA). Millennium Management had $1.2 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $0.3 million investment in the stock during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors, D. E. Shaw’s D E Shaw, and Greg Eisner’s Engineers Gate Manager.
Let’s also examine hedge fund activity in other stocks similar to SIGA Technologies Inc. (NASDAQ:SIGA). We will take a look at Turning Point Brands, Inc. (NYSE:TPB), BlackRock Resources & Commodities Strategy Trust (NYSE:BCX), Patterson-UTI Energy, Inc. (NASDAQ:PTEN), Brainstorm Cell Therapeutics Inc. (NASDAQ:BCLI), Intersect ENT Inc (NASDAQ:XENT), Marine Products Corp. (NYSE:MPX), and SurModics, Inc. (NASDAQ:SRDX). This group of stocks’ market values are similar to SIGA’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 13.4 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $52 million in SIGA’s case. Turning Point Brands, Inc. (NYSE:TPB) is the most popular stock in this table. On the other hand Brainstorm Cell Therapeutics Inc. (NASDAQ:BCLI) is the least popular one with only 3 bullish hedge fund positions. SIGA Technologies Inc. (NASDAQ:SIGA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SIGA is 71. 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 SIGA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SIGA were disappointed as the stock returned 2.6% 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.
Disclosure: None. This article was originally published at Insider Monkey.