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Were Hedge Funds Right About Cashing Out Of Cerus Corporation (CERS)?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Cerus Corporation (NASDAQ:CERS), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Cerus Corporation (NASDAQ:CERS) investors should pay attention to a decrease in support from the world’s most elite money managers lately. CERS was in 13 hedge funds’ portfolios at the end of June. There were 17 hedge funds in our database with CERS positions at the end of the previous quarter. Our calculations also showed that CERS isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In today’s marketplace there are dozens of gauges stock traders have at their disposal to assess stocks. Some of the most innovative gauges are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can trounce the market by a very impressive margin (see the details here).

Noam Gottesman GLG Partners

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s review the new hedge fund action encompassing Cerus Corporation (NASDAQ:CERS).

Hedge fund activity in Cerus Corporation (NASDAQ:CERS)

At Q2’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -24% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CERS over the last 16 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with CERS Positions

Of the funds tracked by Insider Monkey, Julian Baker and Felix Baker’s Baker Bros. Advisors has the biggest position in Cerus Corporation (NASDAQ:CERS), worth close to $60.4 million, accounting for 0.4% of its total 13F portfolio. On Baker Bros. Advisors’s heels is Rima Senvest Management, led by Richard Mashaal, holding a $10.9 million position; the fund has 1% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism consist of Ken Griffin’s Citadel Investment Group, D. E. Shaw’s D E Shaw and Noam Gottesman’s GLG Partners.

Because Cerus Corporation (NASDAQ:CERS) has faced declining sentiment from the smart money, we can see that there is a sect of hedgies who sold off their entire stakes in the second quarter. Interestingly, Israel Englander’s Millennium Management cut the biggest investment of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $7.6 million in stock, and Richard Driehaus’s Driehaus Capital was right behind this move, as the fund cut about $3.4 million worth. These moves are interesting, as total hedge fund interest fell by 4 funds in the second quarter.

Let’s go over hedge fund activity in other stocks similar to Cerus Corporation (NASDAQ:CERS). We will take a look at e.l.f. Beauty, Inc. (NYSE:ELF), AK Steel Holding Corporation (NYSE:AKS), Diebold Nixdorf Incorporated (NYSE:DBD), and Schnitzer Steel Industries, Inc. (NASDAQ:SCHN). This group of stocks’ market values resemble CERS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ELF 18 198724 0
AKS 14 25987 1
DBD 15 128905 -3
SCHN 12 28629 -2
Average 14.75 95561 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $99 million in CERS’s case. e.l.f. Beauty, Inc. (NYSE:ELF) is the most popular stock in this table. On the other hand Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) is the least popular one with only 12 bullish hedge fund positions. Cerus Corporation (NASDAQ:CERS) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CERS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CERS investors were disappointed as the stock returned -8.2% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

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

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