Kadmon Holdings, Inc. (KDMN) Fell Out Of Favor With Hedge Funds

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Kadmon Holdings, Inc. (NASDAQ:KDMN).

Is Kadmon Holdings, Inc. (NASDAQ:KDMN) a first-rate investment right now? Money managers were getting less bullish. The number of long hedge fund bets dropped by 7 in recent months. Kadmon Holdings, Inc. (NASDAQ:KDMN) was in 24 hedge funds’ portfolios at the end of March. The all time high for this statistic is 31. Our calculations also showed that KDMN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 31 hedge funds in our database with KDMN holdings at the end of December.

If you’d ask most investors, hedge funds are viewed as slow, old financial vehicles of years past. While there are over 8000 funds with their doors open at the moment, We look at the masters of this club, around 850 funds. These investment experts control the lion’s share of the smart money’s total asset base, and by tracking their first-class stock picks, Insider Monkey has determined numerous investment strategies that have historically surpassed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Joseph Edelman of Perceptive Advisors

Joseph Edelman of Perceptive Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let’s go over the new hedge fund action encompassing Kadmon Holdings, Inc. (NASDAQ:KDMN).

Do Hedge Funds Think KDMN Is A Good Stock To Buy Now?

At the end of March, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -23% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards KDMN over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Perceptive Advisors was the largest shareholder of Kadmon Holdings, Inc. (NASDAQ:KDMN), with a stake worth $61.1 million reported as of the end of March. Trailing Perceptive Advisors was Point72 Asset Management, which amassed a stake valued at $45.8 million. Third Point, Laurion Capital Management, and Vivo 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 Great Point Partners allocated the biggest weight to Kadmon Holdings, Inc. (NASDAQ:KDMN), around 3.82% of its 13F portfolio. Dorset Management is also relatively very bullish on the stock, earmarking 1.27 percent of its 13F equity portfolio to KDMN.

Due to the fact that Kadmon Holdings, Inc. (NASDAQ:KDMN) has faced a decline in interest from hedge fund managers, we can see that there were a few hedge funds that slashed their entire stakes by the end of the first quarter. At the top of the heap, Mitchell Blutt’s Consonance Capital Management dumped the biggest investment of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $30.5 million in stock, and Ting Jia’s Octagon Capital Advisors was right behind this move, as the fund dumped about $1.8 million worth. These transactions are important to note, as total hedge fund interest dropped by 7 funds by the end of the first quarter.

Let’s go over hedge fund activity in other stocks similar to Kadmon Holdings, Inc. (NASDAQ:KDMN). These stocks are GAN Limited (NASDAQ:GAN), iHuman Inc. (NYSE:IH), Zepp Health Corporation (NYSE:ZEPP), Rafael Holdings, Inc. (NYSE:RFL), Cass Information Systems, Inc. (NASDAQ:CASS), Provention Bio, Inc. (NASDAQ:PRVB), and Aemetis, Inc (NASDAQ:AMTX). This group of stocks’ market values resemble KDMN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GAN 11 64056 -11
IH 1 371 -3
ZEPP 5 4780 1
RFL 8 47979 1
CASS 9 25992 5
PRVB 11 55520 1
AMTX 15 101763 11
Average 8.6 42923 0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.6 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $286 million in KDMN’s case. Aemetis, Inc (NASDAQ:AMTX) is the most popular stock in this table. On the other hand iHuman Inc. (NYSE:IH) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Kadmon Holdings, Inc. (NASDAQ:KDMN) is more popular among hedge funds. Our overall hedge fund sentiment score for KDMN is 71.2. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and still managed to beat the market by 7.7 percentage points. Hedge funds were also right about betting on KDMN, though not to the same extent, as the stock returned 10% since the end of March (through July 16th) and outperformed the market as well.

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Disclosure: None. This article was originally published at Insider Monkey.