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This Hedge Fund Bought Cellular Biomedicine Group, Inc. (CBMG) At The Right Time

Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged through November 22nd. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 52% and 49% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 34.7% in 2019 (through November 22) and outperformed the broader market benchmark by 8.5 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Is Cellular Biomedicine Group, Inc. (NASDAQ:CBMG) a safe stock to buy now? Hedge funds are turning bullish. The number of bullish hedge fund positions rose by 1 recently. Our calculations also showed that CBMG isn’t among the 30 most popular stocks among hedge funds. CBMG was in 2 hedge funds’ portfolios at the end of the third quarter of 2019. There were 1 hedge funds in our database with CBMG holdings at the end of the previous quarter.

According to most traders, hedge funds are viewed as unimportant, outdated investment tools of years past. While there are more than 8000 funds trading today, We choose to focus on the bigwigs of this club, approximately 750 funds. Most estimates calculate that this group of people control most of the smart money’s total capital, and by watching their unrivaled equity investments, Insider Monkey has deciphered a number of investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Kerr Neilson of Platinum Asset Management

Kerr Neilson of Platinum Asset Management

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a glance at the recent hedge fund action surrounding Cellular Biomedicine Group, Inc. (NASDAQ:CBMG).

What have hedge funds been doing with Cellular Biomedicine Group, Inc. (NASDAQ:CBMG)?

At Q3’s end, a total of 2 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CBMG over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

CBMG_nov2019

The largest stake in Cellular Biomedicine Group, Inc. (NASDAQ:CBMG) was held by Platinum Asset Management, which reported holding $10.5 million worth of stock at the end of September. It was followed by Hillhouse Capital Management with a $3.5 million position.

As aggregate interest increased, specific money managers have jumped into Cellular Biomedicine Group, Inc. (NASDAQ:CBMG) headfirst. Hillhouse Capital Management, managed by Lei Zhang, initiated the most outsized position in Cellular Biomedicine Group, Inc. (NASDAQ:CBMG). Hillhouse Capital Management had $3.5 million invested in the company at the end of the quarter.

Let’s check out hedge fund activity in other stocks similar to Cellular Biomedicine Group, Inc. (NASDAQ:CBMG). These stocks are WhiteHorse Finance, Inc. (NASDAQ:WHF), Fiesta Restaurant Group Inc (NASDAQ:FRGI), ViewRay, Inc. (NASDAQ:VRAY), and Solar Senior Capital Ltd (NASDAQ:SUNS). All of these stocks’ market caps resemble CBMG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WHF 3 3065 -2
FRGI 14 103176 0
VRAY 20 103713 3
SUNS 3 1058 2
Average 10 52753 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was $14 million in CBMG’s case. ViewRay, Inc. (NASDAQ:VRAY) is the most popular stock in this table. On the other hand WhiteHorse Finance, Inc. (NASDAQ:WHF) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Cellular Biomedicine Group, Inc. (NASDAQ:CBMG) is even less popular than WHF. Hedge funds clearly dropped the ball on CBMG as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. A small number of hedge funds were also right about betting on CBMG as the stock returned 17.4% during the fourth quarter (through 11/22) and outperformed the market by an even larger margin.

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

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