We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT).
Is EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT) a cheap investment today? Investors who are in the know were getting less bullish. The number of long hedge fund positions were trimmed by 2 in recent months. EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT) was in 3 hedge funds’ portfolios at the end of September. The all time high for this statistics is 10. Our calculations also showed that EYPT 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.
To the average investor there are several signals investors have at their disposal to analyze their holdings. A duo of the most underrated signals are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can outclass the S&P 500 by a solid 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 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.With all of this in mind let’s take a look at the key hedge fund action surrounding EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT).
What does smart money think about EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT)?
At third quarter’s end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -40% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in EYPT a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Citadel Investment Group, managed by Ken Griffin, holds the largest position in EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT). Citadel Investment Group has a $0.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Highland Capital Management, managed by James Dondero, which holds a $0 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Highland Capital Management allocated the biggest weight to EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT), around 0.0041% of its 13F portfolio. LMR Partners is also relatively very bullish on the stock, designating 0.0003 percent of its 13F equity portfolio to EYPT.
Due to the fact that EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT) has experienced declining sentiment from the smart money, we can see that there were a few hedge funds that slashed their positions entirely by the end of the third quarter. It’s worth mentioning that Donald Sussman’s Paloma Partners said goodbye to the largest position of the 750 funds watched by Insider Monkey, comprising an estimated $0.1 million in stock. Israel Englander’s fund, Millennium Management, also sold off its stock, about $0 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks similar to EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT). We will take a look at Natural Health Trends Corp. (NASDAQ:NHTC), TETRA Technologies, Inc. (NYSE:TTI), Cortland Bancorp (NASDAQ:CLDB), HMN Financial, Inc. (NASDAQ:HMNF), Vince Holding Corp (NYSE:VNCE), Network-1 Technologies Inc (NYSE:NTIP), and Cocrystal Pharma, Inc. (NASDAQ:COCP). This group of stocks’ market caps are similar to EYPT’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 4.1 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $0 million in EYPT’s case. TETRA Technologies, Inc. (NYSE:TTI) is the most popular stock in this table. On the other hand Cortland Bancorp (NASDAQ:CLDB) is the least popular one with only 2 bullish hedge fund positions. EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EYPT is 17. 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. 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 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 and surpassed the market again by 15.4 percentage points. Unfortunately EYPT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); EYPT investors were disappointed as the stock returned -17.3% since the end of September (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 in 2020.
Disclosure: None. This article was originally published at Insider Monkey.