Were Hedge Funds Right About Souring On AC Immune SA (ACIU)?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 28, so let’s proceed with the discussion of the hedge fund sentiment on AC Immune SA (NASDAQ:ACIU).

Is AC Immune SA (NASDAQ:ACIU) the right investment to pursue these days? Hedge funds are taking a bearish view. The number of bullish hedge fund bets shrunk by 2 recently. Our calculations also showed that ACIU 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Millennium Management, Catapult Capital Management

Unlike other investors who track every movement of the 25 largest hedge funds, our long-short investment strategy relies on hedge fund buy/sell signals given by the 100 best performing hedge funds. Let’s take a glance at the latest hedge fund action encompassing AC Immune SA (NASDAQ:ACIU).

What have hedge funds been doing with AC Immune SA (NASDAQ:ACIU)?

At the end of the second quarter, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -22% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ACIU over the last 16 quarters. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

No of Hedge Funds with ACIU Positions

When looking at the institutional investors followed by Insider Monkey, Mark Lampert’s Biotechnology Value Fund / BVF Inc has the largest position in AC Immune SA (NASDAQ:ACIU), worth close to $54.5 million, comprising 6% of its total 13F portfolio. The second most bullish fund manager is Lawrence Hawkins of Prosight Capital, with a $3.1 million position; 1.6% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions consist of Renaissance Technologies, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group.

Due to the fact that AC Immune SA (NASDAQ:ACIU) has faced falling interest from the aggregate hedge fund industry, it’s easy to see that there were a few funds that elected to cut their positions entirely last quarter. At the top of the heap, Stanley Druckenmiller’s Duquesne Capital sold off the biggest investment of all the hedgies monitored by Insider Monkey, valued at about $6.7 million in stock. Michael S. Weiss and Lindsay A. Rosenwald’s fund, Opus Point Partners Management, also sold off its stock, about $0.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to AC Immune SA (NASDAQ:ACIU). These stocks are Assembly Biosciences Inc (NASDAQ:ASMB), GenMark Diagnostics, Inc (NASDAQ:GNMK), Metropolitan Bank Holding Corp. (NYSE:MCB), and NACCO Industries, Inc. (NYSE:NC). All of these stocks’ market caps are similar to ACIU’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ASMB 18 82204 -1
GNMK 14 74719 0
MCB 6 62855 -2
NC 9 17991 0
Average 11.75 59442 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $62 million in ACIU’s case. Assembly Biosciences Inc (NASDAQ:ASMB) is the most popular stock in this table. On the other hand Metropolitan Bank Holding Corp. (NYSE:MCB) is the least popular one with only 6 bullish hedge fund positions. AC Immune SA (NASDAQ:ACIU) 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 ACIU wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ACIU investors were disappointed as the stock returned -10.8% 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.