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Should You Buy Puma Biotechnology Inc (PBYI)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Puma Biotechnology Inc (NYSE:PBYI).

Puma Biotechnology Inc (NYSE:PBYI) was in 20 hedge funds’ portfolios at the end of the first quarter of 2020. PBYI investors should be aware of an increase in activity from the world’s largest hedge funds in recent months. There were 17 hedge funds in our database with PBYI positions at the end of the previous quarter. Our calculations also showed that PBYI 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.

In the 21st century investor’s toolkit there are a large number of signals stock traders have at their disposal to size up publicly traded companies. A couple of the most useful signals are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the top money managers can trounce the market by a very impressive amount (see the details here).

Oleg Nodelman EcoR1 Capital

Oleg Nodelman of EcoR1 Capital

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. 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. Keeping this in mind we’re going to check out the new hedge fund action encompassing Puma Biotechnology Inc (NYSE:PBYI).

What have hedge funds been doing with Puma Biotechnology Inc (NYSE:PBYI)?

At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PBYI over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is PBYI A Good Stock To Buy?

More specifically, EcoR1 Capital was the largest shareholder of Puma Biotechnology Inc (NYSE:PBYI), with a stake worth $21.4 million reported as of the end of September. Trailing EcoR1 Capital was Camber Capital Management, which amassed a stake valued at $16.5 million. Millennium Management, Palo Alto Investors, and Renaissance Technologies 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 EcoR1 Capital allocated the biggest weight to Puma Biotechnology Inc (NYSE:PBYI), around 2.24% of its 13F portfolio. Palo Alto Investors is also relatively very bullish on the stock, setting aside 0.99 percent of its 13F equity portfolio to PBYI.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. EcoR1 Capital, managed by Oleg Nodelman, established the most outsized position in Puma Biotechnology Inc (NYSE:PBYI). EcoR1 Capital had $21.4 million invested in the company at the end of the quarter. Stephen DuBois’s Camber Capital Management also made a $16.5 million investment in the stock during the quarter. The other funds with brand new PBYI positions are Aaron Cowen’s Suvretta Capital Management, Efrem Kamen’s Pura Vida Investments, and Kamran Moghtaderi’s Eversept Partners.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Puma Biotechnology Inc (NYSE:PBYI) but similarly valued. We will take a look at Betterware de Mexico, S.A. de C.V. (NASDAQ:BWMX), AMC Entertainment Holdings Inc (NYSE:AMC), Enerplus Corp (NYSE:ERF), and Citizens, Inc. (NYSE:CIA). This group of stocks’ market caps are closest to PBYI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BWMX 2 622 2
AMC 14 32247 -5
ERF 15 45932 -5
CIA 3 3254 1
Average 8.5 20514 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $100 million in PBYI’s case. Enerplus Corp (NYSE:ERF) is the most popular stock in this table. On the other hand Betterware de Mexico, S.A. de C.V. (NASDAQ:BWMX) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Puma Biotechnology Inc (NYSE:PBYI) is more popular among hedge funds. 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 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. Unfortunately PBYI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PBYI were disappointed as the stock returned 6.6% during the second quarter (through June 17th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.