The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Soleno Therapeutics, Inc. (NASDAQ:SLNO).
Is SLNO a good stock to buy now? Soleno Therapeutics, Inc. (NASDAQ:SLNO) shareholders have witnessed a decrease in support from the world’s most elite money managers lately. Soleno Therapeutics, Inc. (NASDAQ:SLNO) was in 13 hedge funds’ portfolios at the end of September. The all time high for this statistic is 15. Our calculations also showed that SLNO 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. With all of this in mind let’s take a gander at the fresh hedge fund action regarding Soleno Therapeutics, Inc. (NASDAQ:SLNO).
Do Hedge Funds Think SLNO Is A Good Stock To Buy Now?
At third quarter’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SLNO over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Nantahala Capital Management was the largest shareholder of Soleno Therapeutics, Inc. (NASDAQ:SLNO), with a stake worth $18.6 million reported as of the end of September. Trailing Nantahala Capital Management was Suvretta Capital Management, which amassed a stake valued at $8.1 million. Consonance Capital Management, Granite Point Capital, and Birchview 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 Birchview Capital allocated the biggest weight to Soleno Therapeutics, Inc. (NASDAQ:SLNO), around 1.39% of its 13F portfolio. Trellus Management Company is also relatively very bullish on the stock, dishing out 1.07 percent of its 13F equity portfolio to SLNO.
Judging by the fact that Soleno Therapeutics, Inc. (NASDAQ:SLNO) has witnessed bearish sentiment from hedge fund managers, it’s safe to say that there exists a select few funds that elected to cut their entire stakes heading into Q4. At the top of the heap, Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund said goodbye to the largest position of the “upper crust” of funds monitored by Insider Monkey, worth close to $2.7 million in stock, and Srini Akkaraju and Michael Dybbs’s Samsara BioCapital was right behind this move, as the fund cut about $1.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 2 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks similar to Soleno Therapeutics, Inc. (NASDAQ:SLNO). We will take a look at Hovnanian Enterprises, Inc. (NYSE:HOV), Medicenna Therapeutics Corp. (NASDAQ:MDNA), Norwood Financial Corp. (NASDAQ:NWFL), Protective Insurance Corporation (NASDAQ:PTVCA), DBV Technologies SA (NASDAQ:DBVT), Calumet Specialty Products Partners, L.P (NASDAQ:CLMT), and Altisource Portfolio Solutions S.A. (NASDAQ:ASPS). This group of stocks’ market caps are closest to SLNO’s market cap.
|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 4 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $46 million in SLNO’s case. Hovnanian Enterprises, Inc. (NYSE:HOV) is the most popular stock in this table. On the other hand Medicenna Therapeutics Corp. (NASDAQ:MDNA) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Soleno Therapeutics, Inc. (NASDAQ:SLNO) is more popular among hedge funds. Our overall hedge fund sentiment score for SLNO is 79. 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. Unfortunately SLNO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SLNO were disappointed as the stock returned -25.9% since the end of the third quarter (through 12/8) 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.