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Were Hedge Funds Right About Selling Corbus Pharmaceuticals (CRBP)?

Before we spend days researching a stock idea we like to take a look at how hedge funds and billionaire investors recently traded that stock. Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of the third quarter of 2018. This means hedge funds that are allocating a higher percentage of their portfolio to small-cap stocks were probably underperforming the market. However, this also means that as small-cap stocks start to mean revert, these hedge funds will start delivering better returns than the S&P 500 Index funds. In this article, we will take a look at what hedge funds think about Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP).

Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP) investors should be aware of a decrease in support from the world’s most elite money managers in recent months. CRBP was in 8 hedge funds’ portfolios at the end of the second quarter of 2019. There were 9 hedge funds in our database with CRBP holdings at the end of the previous quarter. Our calculations also showed that CRBP 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 the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

CRBP_oct2019

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 take a look at the key hedge fund action regarding Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP).

Hedge fund activity in Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP)

At the end of the second quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. By comparison, 6 hedge funds held shares or bullish call options in CRBP a year ago. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Nathan Fischel DAFNA Capital

More specifically, Knoll Capital Management was the largest shareholder of Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP), with a stake worth $34.6 million reported as of the end of March. Trailing Knoll Capital Management was D E Shaw, which amassed a stake valued at $6.6 million. Millennium Management, DAFNA Capital Management, and OZ Management were also very fond of the stock, giving the stock large weights in their portfolios.

Judging by the fact that Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP) has witnessed declining sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few hedge funds that slashed their entire stakes by the end of the second quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group dropped the largest investment of the “upper crust” of funds tracked by Insider Monkey, totaling close to $0.9 million in stock. Peter A. Wright’s fund, P.A.W. CAPITAL PARTNERS, also cut its stock, about $0.2 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 1 funds by the end of the second quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP) but similarly valued. We will take a look at Collegium Pharmaceutical Inc (NASDAQ:COLL), Castlight Health Inc (NYSE:CSLT), Intrepid Potash, Inc. (NYSE:IPI), and Natural Resource Partners LP (NYSE:NRP). All of these stocks’ market caps match CRBP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
COLL 16 70836 -4
CSLT 16 27942 4
IPI 16 30362 2
NRP 6 24394 1
Average 13.5 38384 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $50 million in CRBP’s case. Collegium Pharmaceutical Inc (NASDAQ:COLL) is the most popular stock in this table. On the other hand Natural Resource Partners LP (NYSE:NRP) is the least popular one with only 6 bullish hedge fund positions. Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP) 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 CRBP wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CRBP investors were disappointed as the stock returned -29.7% 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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