The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Savara, Inc. (NASDAQ:SVRA).
Is SVRA a good stock to buy now? Hedge fund interest in Savara, Inc. (NASDAQ:SVRA) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that SVRA 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). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Huttig Building Products, Inc. (NASDAQ:HBP), 180 Degree Capital Corp. (NASDAQ:TURN), and Vascular Biogenics Ltd. (NASDAQ:VBLT) to gather more data points.
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 we’re going to take a peek at the recent hedge fund action regarding Savara, Inc. (NASDAQ:SVRA).
Do Hedge Funds Think SVRA Is A Good Stock To Buy Now?
At third quarter’s end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in SVRA a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Farallon Capital was the largest shareholder of Savara, Inc. (NASDAQ:SVRA), with a stake worth $4.9 million reported as of the end of September. Trailing Farallon Capital was Woodline Partners, which amassed a stake valued at $0.6 million. Adage Capital Management, Renaissance Technologies, and Pura Vida Investments 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 Farallon Capital allocated the biggest weight to Savara, Inc. (NASDAQ:SVRA), around 0.03% of its 13F portfolio. Woodline Partners is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to SVRA.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Renaissance Technologies).
Let’s now review hedge fund activity in other stocks similar to Savara, Inc. (NASDAQ:SVRA). These stocks are Huttig Building Products, Inc. (NASDAQ:HBP), 180 Degree Capital Corp. (NASDAQ:TURN), Vascular Biogenics Ltd. (NASDAQ:VBLT), Reed’s, Inc. (NASDAQ:REED), Akari Therapeutics PLC (NASDAQ:AKTX), Aware, Inc. (NASDAQ:AWRE), and Anixa Biosciences, Inc. (NASDAQ:ANIX). This group of stocks’ market valuations are closest to SVRA’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 2.3 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $7 million in SVRA’s case. Reed’s, Inc. (NASDAQ:REED) is the most popular stock in this table. On the other hand Vascular Biogenics Ltd. (NASDAQ:VBLT) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Savara, Inc. (NASDAQ:SVRA) is more popular among hedge funds. Our overall hedge fund sentiment score for SVRA is 74.3. 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 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on SVRA as the stock returned 32.1% since the end of September (through 12/8) 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.