While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding CTI Biopharma Corp. (NASDAQ:CTIC).
CTI Biopharma Corp. (NASDAQ:CTIC) was in 6 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 11. CTIC investors should pay attention to a decrease in hedge fund interest in recent months. There were 9 hedge funds in our database with CTIC positions at the end of the second quarter. Our calculations also showed that CTIC 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.
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 take a glance at the recent hedge fund action regarding CTI Biopharma Corp. (NASDAQ:CTIC).
Hedge fund activity in CTI Biopharma Corp. (NASDAQ:CTIC)
At third quarter’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in CTIC over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, OrbiMed Advisors held the most valuable stake in CTI Biopharma Corp. (NASDAQ:CTIC), which was worth $20.5 million at the end of the third quarter. On the second spot was Biotechnology Value Fund / BVF Inc which amassed $14.9 million worth of shares. Stonepine Capital, Renaissance Technologies, and Two Sigma Advisors were 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 Stonepine Capital allocated the biggest weight to CTI Biopharma Corp. (NASDAQ:CTIC), around 8.43% of its 13F portfolio. Biotechnology Value Fund / BVF Inc is also relatively very bullish on the stock, setting aside 0.81 percent of its 13F equity portfolio to CTIC.
Because CTI Biopharma Corp. (NASDAQ:CTIC) has faced bearish sentiment from hedge fund managers, it’s easy to see that there is a sect of money managers who sold off their entire stakes heading into Q4. Interestingly, Israel Englander’s Millennium Management dumped the biggest position of all the hedgies followed by Insider Monkey, worth close to $0.1 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund dropped about $0 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 3 funds heading into Q4.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as CTI Biopharma Corp. (NASDAQ:CTIC) but similarly valued. We will take a look at Montage Resources Corp (NYSE:MR), Lakeland Industries, Inc. (NASDAQ:LAKE), InnerWorkings, Inc. (NASDAQ:INWK), Consolidated Water Co. Ltd. (NASDAQ:CWCO), First Choice Bancorp (NASDAQ:FCBP), CRH Medical Corporation (NYSE:CRHM), and Zosano Pharma Corp (NASDAQ:ZSAN). All of these stocks’ market caps resemble CTIC’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 8.7 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $49 million in CTIC’s case. Montage Resources Corp (NYSE:MR) is the most popular stock in this table. On the other hand First Choice Bancorp (NASDAQ:FCBP) is the least popular one with only 2 bullish hedge fund positions. CTI Biopharma Corp. (NASDAQ:CTIC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CTIC is 35. 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 November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on CTIC as the stock returned 72.6% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.