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What Does Hedge Fund Sentiment Say About Affimed NV (AFMD)?

The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards Affimed NV (NASDAQ:AFMD), and what that likely means for the prospects of the company and its stock.

Is Affimed NV (NASDAQ:AFMD) a good investment right now? The smart money is turning less bullish. The number of long hedge fund bets has gone down by 1 in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Stonegate Mortageg Corp (NYSE:SGM), Journal Media Group Inc (NYSE:JMG), and USA Truck, Inc. (NASDAQ:USAK) to gather more data points.

According to most shareholders, hedge funds are seen as slow, old investment tools of the past. While there are more than 8000 funds trading at present, Our experts look at the top tier of this club, approximately 700 funds. These hedge fund managers direct the majority of the smart money’s total asset base, and by keeping track of their finest stock picks, Insider Monkey has determined numerous investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Keeping this in mind, we’re going to take a look at the key action regarding Affimed NV (NASDAQ:AFMD).

What have hedge funds been doing with Affimed NV (NASDAQ:AFMD)?

Heading into Q4, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the second quarter. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, OrbiMed Advisors, managed by Samuel Isaly, holds the number one position in Affimed NV (NASDAQ:AFMD). OrbiMed Advisors has a $28.3 million position in the stock, comprising 0.3% of its 13F portfolio. On OrbiMed Advisors’s heels is Bain Capital of Brookside Capital, with a $12.9 million position; 0.4% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors with similar optimism contain Joseph Edelman’s Perceptive Advisors, Zach Schreiber’s Point State Capital and James A. Silverman’s Opaleye Management.

Due to the fact that Affimed NV (NASDAQ:AFMD) has faced a declination in interest from the entirety of the hedge funds we track, logic holds that there exists a select few money managers that slashed their full holdings in the third quarter. It’s worth mentioning that Anand Parekh’s Alyeska Investment Group dumped the largest investment of the 700 funds followed by Insider Monkey, valued at an estimated $1.9 million in stock, and Stuart Weisbrod’s Iguana Healthcare Management was right behind this move, as the fund cut about $1.3 million worth of shares. These transactions are interesting, as aggregate hedge fund interest fell by 1 funds in the third quarter.

Let’s check out hedge fund activity in other stocks similar to Affimed NV (NASDAQ:AFMD). These stocks are Stonegate Mortageg Corp (NYSE:SGM), Journal Media Group Inc (NYSE:JMG), USA Truck, Inc. (NASDAQ:USAK), and Guidance Software, Inc. (NASDAQ:GUID). All of these stocks’ market caps match AFMD’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SGM 9 52682 -1
JMG 13 36983 0
USAK 12 18374 -2
GUID 11 30058 -1

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. Journal Media Group Inc (NYSE:JMG) is the most popular stock in this table. On the other hand Stonegate Mortageg Corp (NYSE:SGM) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Affimed NV (NASDAQ:AFMD) registers the same level of popularity as SGM, although hedge funds amassed shares worth $59 million in aggregate during the third quarter. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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