Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to VYNE Therapeutics Inc. (NASDAQ:VYNE) changed recently.
Is VYNE a good stockto buy now? Investors who are in the know were in a pessimistic mood. The number of long hedge fund bets dropped by 4 in recent months. VYNE Therapeutics Inc. (NASDAQ:VYNE) was in 10 hedge funds’ portfolios at the end of September. The all time high for this statistics is 18. Our calculations also showed that VYNE 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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 latest hedge fund action surrounding VYNE Therapeutics Inc. (NASDAQ:VYNE).
Do Hedge Funds Think VYNE Is A Good Stock To Buy Now?
At third quarter’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -29% from the second quarter of 2020. By comparison, 9 hedge funds held shares or bullish call options in VYNE a year ago. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Joseph Edelman’s Perceptive Advisors has the largest position in VYNE Therapeutics Inc. (NASDAQ:VYNE), worth close to $38 million, corresponding to 0.6% of its total 13F portfolio. On Perceptive Advisors’s heels is 683 Capital Partners, managed by Ari Zweiman, which holds a $9.9 million position; 0.7% of its 13F portfolio is allocated to the company. Other peers that are bullish encompass Albert Cha and Frank Kung’s Vivo Capital, Joe Riccardo’s Healthcare Value Capital and Steve Cohen’s Point72 Asset Management. In terms of the portfolio weights assigned to each position Healthcare Value Capital allocated the biggest weight to VYNE Therapeutics Inc. (NASDAQ:VYNE), around 9.85% of its 13F portfolio. 683 Capital Partners is also relatively very bullish on the stock, earmarking 0.73 percent of its 13F equity portfolio to VYNE.
Because VYNE Therapeutics Inc. (NASDAQ:VYNE) has faced falling interest from the aggregate hedge fund industry, we can see that there exists a select few hedge funds that elected to cut their entire stakes last quarter. Intriguingly, Samuel Isaly’s OrbiMed Advisors sold off the biggest stake of the 750 funds followed by Insider Monkey, comprising close to $1 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund sold off about $0.9 million worth. These transactions are important to note, as total hedge fund interest dropped by 4 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as VYNE Therapeutics Inc. (NASDAQ:VYNE) but similarly valued. These stocks are Diamond S Shipping Inc. (NYSE:DSSI), EZCORP Inc (NASDAQ:EZPW), Surface Oncology, Inc. (NASDAQ:SURF), Clearfield, Inc. (NASDAQ:CLFD), Independent Bank Corporation (NASDAQ:IBCP), Xeris Pharmaceuticals, Inc. (NASDAQ:XERS), and Guaranty Bancshares, Inc. (NASDAQ:GNTY). This group of stocks’ market values resemble VYNE’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 10.6 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $55 million in VYNE’s case. Diamond S Shipping Inc. (NYSE:DSSI) is the most popular stock in this table. On the other hand Guaranty Bancshares, Inc. (NASDAQ:GNTY) is the least popular one with only 2 bullish hedge fund positions. VYNE Therapeutics Inc. (NASDAQ:VYNE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VYNE is 48.4. 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 negative signal and 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 32.9% in 2020 through December 8th and surpassed the market again by 16.2 percentage points. Unfortunately VYNE wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); VYNE investors were disappointed as the stock returned 7.8% since the end of September (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.
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Disclosure: None. This article was originally published at Insider Monkey.