Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Altimmune, Inc. (NASDAQ:ALT)? The smart money sentiment can provide an answer to this question.
Altimmune, Inc. (NASDAQ:ALT) investors should pay attention to an increase in enthusiasm from smart money in recent months. Altimmune, Inc. (NASDAQ:ALT) was in 18 hedge funds’ portfolios at the end of September. The all time high for this statistic is 12. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ALT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
At the moment there are several gauges investors employ to size up their holdings. A couple of the less known gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the elite fund managers can outclass the S&P 500 by a significant amount (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let’s view the new hedge fund action encompassing Altimmune, Inc. (NASDAQ:ALT).
Do Hedge Funds Think ALT Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ALT over the last 21 quarters. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Julian Baker and Felix Baker’s Baker Bros. Advisors has the largest position in Altimmune, Inc. (NASDAQ:ALT), worth close to $29.1 million, amounting to 0.1% of its total 13F portfolio. On Baker Bros. Advisors’s heels is Behzad Aghazadeh of Avoro Capital Advisors (venBio Select Advisor), with a $26.4 million position; 0.4% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that hold long positions include D. E. Shaw’s D E Shaw, Steven Boyd’s Armistice Capital. In terms of the portfolio weights assigned to each position Acuta Capital Partners allocated the biggest weight to Altimmune, Inc. (NASDAQ:ALT), around 2.47% of its 13F portfolio. Ghost Tree Capital is also relatively very bullish on the stock, dishing out 0.76 percent of its 13F equity portfolio to ALT.
As one would reasonably expect, some big names were breaking ground themselves. Avoro Capital Advisors (venBio Select Advisor), managed by Behzad Aghazadeh, initiated the largest position in Altimmune, Inc. (NASDAQ:ALT). Avoro Capital Advisors (venBio Select Advisor) had $26.4 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also made a $21.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Steven Boyd’s Armistice Capital, John Overdeck and David Siegel’s Two Sigma Advisors, and Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Altimmune, Inc. (NASDAQ:ALT) but similarly valued. We will take a look at Cambium Networks Corporation (NASDAQ:CMBM), Byline Bancorp, Inc. (NYSE:BY), McEwen Mining Inc (NYSE:MUX), Establishment Labs Holdings Inc. (NASDAQ:ESTA), QCR Holdings, Inc. (NASDAQ:QCRH), Avid Bioservices, Inc. (NASDAQ:CDMO), and Napco Security Technologies Inc (NASDAQ:NSSC). This group of stocks’ market caps are similar to ALT’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.1 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $145 million in ALT’s case. Avid Bioservices, Inc. (NASDAQ:CDMO) is the most popular stock in this table. On the other hand Napco Security Technologies Inc (NASDAQ:NSSC) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Altimmune, Inc. (NASDAQ:ALT) is more popular among hedge funds. Our overall hedge fund sentiment score for ALT is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Unfortunately ALT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ALT were disappointed as the stock returned 1.1% since the end of the third quarter (through 12/14) 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 most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.