In this article we are going to use hedge fund sentiment as a tool and determine whether ZIOPHARM Oncology Inc. (NASDAQ:ZIOP) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is ZIOP a good stock to buy now? ZIOPHARM Oncology Inc. (NASDAQ:ZIOP) has seen an increase in hedge fund sentiment in recent months. ZIOPHARM Oncology Inc. (NASDAQ:ZIOP) was in 13 hedge funds’ portfolios at the end of September. The all time high for this statistic is 16. There were 11 hedge funds in our database with ZIOP holdings at the end of June. Our calculations also showed that ZIOP 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a 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 we’re going to view the fresh hedge fund action encompassing ZIOPHARM Oncology Inc. (NASDAQ:ZIOP).
Do Hedge Funds Think ZIOP Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ZIOP 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, MSDC Management was the largest shareholder of ZIOPHARM Oncology Inc. (NASDAQ:ZIOP), with a stake worth $38.2 million reported as of the end of September. Trailing MSDC Management was Miller Value Partners, which amassed a stake valued at $31.2 million. Discovery Capital Management, Millennium Management, and Two Sigma Advisors 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 MSDC Management allocated the biggest weight to ZIOPHARM Oncology Inc. (NASDAQ:ZIOP), around 7.99% of its 13F portfolio. Discovery Capital Management is also relatively very bullish on the stock, earmarking 4.02 percent of its 13F equity portfolio to ZIOP.
As aggregate interest increased, key hedge funds have jumped into ZIOPHARM Oncology Inc. (NASDAQ:ZIOP) headfirst. Ratan Capital Group, managed by Nehal Chopra, established the most valuable position in ZIOPHARM Oncology Inc. (NASDAQ:ZIOP). Ratan Capital Group had $0.4 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also initiated a $0 million position during the quarter. The only other fund with a brand new ZIOP position is Michael Gelband’s ExodusPoint Capital.
Let’s check out hedge fund activity in other stocks similar to ZIOPHARM Oncology Inc. (NASDAQ:ZIOP). These stocks are Ellington Financial Inc. (NYSE:EFC), SIGA Technologies Inc. (NASDAQ:SIGA), 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), and Intersect ENT Inc (NASDAQ:XENT). All of these stocks’ market caps are closest to ZIOP’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 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $102 million in ZIOP’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. ZIOPHARM Oncology Inc. (NASDAQ:ZIOP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ZIOP is 55.2. 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. A small number of hedge funds were also right about betting on ZIOP as the stock returned 14.7% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.