While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS).
Is Sunesis Pharmaceuticals (SNSS) a good stock to buy now? Investors who are in the know were getting less optimistic. The number of bullish hedge fund positions retreated by 1 lately. Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS) was in 6 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 13. Our calculations also showed that SNSS 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 7 hedge funds in our database with SNSS positions at the end of the second quarter.
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 analyze the key hedge fund action surrounding Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS).
What have hedge funds been doing with Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS)?
Heading into the fourth quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the second quarter of 2020. By comparison, 12 hedge funds held shares or bullish call options in SNSS a year ago. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Biotechnology Value Fund / BVF Inc, managed by Mark Lampert, holds the largest position in Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS). Biotechnology Value Fund / BVF Inc has a $2.2 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Nantahala Capital Management, led by Wilmot B. Harkey and Daniel Mack, holding a $0.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that hold long positions consist of Ken Griffin’s Citadel Investment Group, William Leland Edwards’s Palo Alto Investors and Julian Baker and Felix Baker’s Baker Bros. Advisors. In terms of the portfolio weights assigned to each position Biotechnology Value Fund / BVF Inc allocated the biggest weight to Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS), around 0.12% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to SNSS.
Because Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS) has witnessed declining sentiment from hedge fund managers, it’s safe to say that there is a sect of hedge funds that decided to sell off their entire stakes by the end of the third quarter. It’s worth mentioning that Neil Shahrestani’s Ikarian Capital dropped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, valued at close to $0 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund dropped about $0 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS) but similarly valued. These stocks are Ion Geophysical Corp (NYSE:IO), Powerbridge Technologies Co., Ltd. (NASDAQ:PBTS), Globus Maritime Ltd (NASDAQ:GLBS), Energy Focus Inc (NASDAQ:EFOI), Iterum Therapeutics plc (NASDAQ:ITRM), Allied Healthcare Products Inc (NASDAQ:AHPI), and Novus Therapeutics, Inc. (NASDAQ:NVUS). This group of stocks’ market caps match SNSS’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 2.1 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $4 million in SNSS’s case. Novus Therapeutics, Inc. (NASDAQ:NVUS) is the most popular stock in this table. On the other hand Powerbridge Technologies Co., Ltd. (NASDAQ:PBTS) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS) is more popular among hedge funds. Our overall hedge fund sentiment score for SNSS is 67.8. 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 November 27th but still managed to beat the market by 16.1 percentage points. Hedge funds were also right about betting on SNSS as the stock returned 20% since the end of September (through 11/27) 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.
Disclosure: None. This article was originally published at Insider Monkey.