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Should You Avoid Ocular Therapeutix Inc (OCUL)?

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Ocular Therapeutix Inc (NASDAQ:OCUL) based on that data.

Ocular Therapeutix Inc (NASDAQ:OCUL) was in 7 hedge funds’ portfolios at the end of the first quarter of 2020. OCUL investors should pay attention to a decrease in hedge fund interest lately. There were 9 hedge funds in our database with OCUL positions at the end of the previous quarter. Our calculations also showed that OCUL isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

If you’d ask most investors, hedge funds are perceived as unimportant, old investment tools of years past. While there are more than 8000 funds in operation today, Our researchers look at the crème de la crème of this club, around 850 funds. These hedge fund managers control the lion’s share of the smart money’s total asset base, and by keeping track of their matchless picks, Insider Monkey has revealed various investment strategies that have historically outrun the market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a look at the key hedge fund action regarding Ocular Therapeutix Inc (NASDAQ:OCUL).

Hedge fund activity in Ocular Therapeutix Inc (NASDAQ:OCUL)

At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -22% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in OCUL a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Opaleye Management held the most valuable stake in Ocular Therapeutix Inc (NASDAQ:OCUL), which was worth $25.4 million at the end of the third quarter. On the second spot was Ikarian Capital which amassed $7.7 million worth of shares. Millennium Management, Citadel Investment Group, and D E Shaw 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 Opaleye Management allocated the biggest weight to Ocular Therapeutix Inc (NASDAQ:OCUL), around 6.72% of its 13F portfolio. Ikarian Capital is also relatively very bullish on the stock, setting aside 0.58 percent of its 13F equity portfolio to OCUL.

Judging by the fact that Ocular Therapeutix Inc (NASDAQ:OCUL) has witnessed a decline in interest from the aggregate hedge fund industry, we can see that there were a few hedge funds that decided to sell off their positions entirely heading into Q4. Intriguingly, Noam Gottesman’s GLG Partners dropped the biggest position of the “upper crust” of funds tracked by Insider Monkey, totaling close to $3 million in stock, and Nick Thakore’s Diametric Capital was right behind this move, as the fund dumped about $0.4 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 2 funds heading into Q4.

Let’s check out hedge fund activity in other stocks similar to Ocular Therapeutix Inc (NASDAQ:OCUL). These stocks are National CineMedia, Inc. (NASDAQ:NCMI), Ooma Inc (NYSE:OOMA), Kamada Ltd (NASDAQ:KMDA), and Park Aerospace Corp. (NYSE:PKE). All of these stocks’ market caps are similar to OCUL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NCMI 14 23599 1
OOMA 14 69276 1
KMDA 2 6276 -1
PKE 11 52848 -2
Average 10.25 38000 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $39 million in OCUL’s case. National CineMedia, Inc. (NASDAQ:NCMI) is the most popular stock in this table. On the other hand Kamada Ltd (NASDAQ:KMDA) is the least popular one with only 2 bullish hedge fund positions. Ocular Therapeutix Inc (NASDAQ:OCUL) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on OCUL as the stock returned 48.4% during the second quarter and outperformed the market by an even larger margin.

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