Where Do Hedge Funds Stand On Aytu BioScience, Inc. (AYTU)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. In this article we are going to take a look at smart money sentiment towards Aytu BioScience, Inc. (NASDAQ:AYTU).

Aytu BioScience, Inc. (NASDAQ:AYTU) has experienced a decrease in enthusiasm from smart money of late. Aytu BioScience, Inc. (NASDAQ:AYTU) was in 3 hedge funds’ portfolios at the end of September. The all time high for this statistics is 6. Our calculations also showed that AYTU 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.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Peter Algert of Algert Global

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 10 most profitable companies in the world 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.Keeping this in mind let’s take a peek at the latest hedge fund action surrounding Aytu BioScience, Inc. (NASDAQ:AYTU).

What does smart money think about Aytu BioScience, Inc. (NASDAQ:AYTU)?

Heading into the fourth quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in AYTU over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

Among these funds, Beech Hill Partners held the most valuable stake in Aytu BioScience, Inc. (NASDAQ:AYTU), which was worth $0 million at the end of the third quarter. On the second spot was Algert Coldiron Investors which amassed $0 million worth of shares. Citadel Investment Group was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Beech Hill Partners allocated the biggest weight to Aytu BioScience, Inc. (NASDAQ:AYTU), around 0.02% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to AYTU.

Since Aytu BioScience, Inc. (NASDAQ:AYTU) has witnessed falling interest from the aggregate hedge fund industry, it’s safe to say that there exists a select few hedgies who were dropping their positions entirely in the third quarter. Intriguingly, Renaissance Technologies sold off the largest stake of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $0.1 million in stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $0.1 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 1 funds in the third quarter.

Let’s now review hedge fund activity in other stocks similar to Aytu BioScience, Inc. (NASDAQ:AYTU). These stocks are Orrstown Financial Services (NASDAQ:ORRF), Harrow Health, Inc. (NASDAQ:HROW), Richmond Mutual Bancorporation, Inc. (NASDAQ:RMBI), Postal Realty Trust, Inc. (NYSE:PSTL), GTY Technology Holdings, Inc. (NASDAQ:GTYH), AudioEye, Inc. (NASDAQ:AEYE), and Parke Bancorp, Inc. (NASDAQ:PKBK). This group of stocks’ market valuations match AYTU’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ORRF 3 3712 -1
HROW 15 33472 5
RMBI 5 3727 0
PSTL 7 27122 1
GTYH 6 8929 2
AEYE 6 15874 4
PKBK 3 10141 -1
Average 6.4 14711 1.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.4 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $0 million in AYTU’s case. Harrow Health, Inc. (NASDAQ:HROW) is the most popular stock in this table. On the other hand Orrstown Financial Services (NASDAQ:ORRF) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Aytu BioScience, Inc. (NASDAQ:AYTU) is even less popular than ORRF. Our overall hedge fund sentiment score for AYTU is 19. 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. Hedge funds dodged a bullet by taking a bearish stance towards AYTU. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd but managed to beat the market again by 15.4 percentage points. Unfortunately AYTU wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); AYTU investors were disappointed as the stock returned -23.5% since the end of the third quarter (through 11/23) 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 so far in 2020.

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