After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Marrone Bio Innovations Inc (NASDAQ:MBII).
Is Marrone Bio Innovations Inc (NASDAQ:MBII) a bargain? Investors who are in the know were buying. The number of long hedge fund bets improved by 1 recently. Marrone Bio Innovations Inc (NASDAQ:MBII) was in 6 hedge funds' portfolios at the end of March. The all time high for this statistic is 6. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MBII isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 5 hedge funds in our database with MBII holdings at the end of December.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Philip Hempleman Ardsley Partners
Philip Hempleman of Ardsley Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let's go over the fresh hedge fund action encompassing Marrone Bio Innovations Inc (NASDAQ:MBII).
Do Hedge Funds Think MBII Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the fourth quarter of 2020. By comparison, 3 hedge funds held shares or bullish call options in MBII 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.
Is MBII A Good Stock To Buy?
The largest stake in Marrone Bio Innovations Inc (NASDAQ:MBII) was held by Ardsley Partners, which reported holding $27.9 million worth of stock at the end of December. It was followed by Fairpointe Capital with a $1.4 million position. Other investors bullish on the company included Millennium Management, Two Sigma Advisors, and ExodusPoint Capital. In terms of the portfolio weights assigned to each position Ardsley Partners allocated the biggest weight to Marrone Bio Innovations Inc (NASDAQ:MBII), around 3.39% of its 13F portfolio. Fairpointe Capital is also relatively very bullish on the stock, setting aside 2.09 percent of its 13F equity portfolio to MBII.
As one would reasonably expect, key money managers were breaking ground themselves. Two Sigma Advisors, managed by John Overdeck and David Siegel, assembled the most valuable position in Marrone Bio Innovations Inc (NASDAQ:MBII). Two Sigma Advisors had $0.1 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also initiated a $0.1 million position during the quarter. The only other fund with a brand new MBII position is Charles Davidson and Joseph Jacobs's Wexford Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Marrone Bio Innovations Inc (NASDAQ:MBII) but similarly valued. These stocks are NL Industries, Inc. (NYSE:NL), American National BankShares Inc (NASDAQ:AMNB), Laredo Petroleum Inc (NYSE:LPI), 9F Inc. (NASDAQ:JFU), Atlas Technical Consultants, Inc. (NASDAQ:ATCX), Immunome, Inc. (NASDAQ:IMNM), and Ooma Inc (NYSE:OOMA). This group of stocks' market valuations resemble MBII's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NL,3,1874,2 AMNB,3,5471,0 LPI,14,38152,4 JFU,4,851,1 ATCX,8,35663,1 IMNM,1,11248,-2 OOMA,14,114359,-1 Average,6.7,29660,0.7 [/table]
As you can see these stocks had an average of 6.7 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $31 million in MBII's case. Laredo Petroleum Inc (NYSE:LPI) is the most popular stock in this table. On the other hand Immunome, Inc. (NASDAQ:IMNM) is the least popular one with only 1 bullish hedge fund positions. Marrone Bio Innovations Inc (NASDAQ:MBII) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MBII is 55.2. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately MBII wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); MBII investors were disappointed as the stock returned -17.7% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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