In this article we will analyze whether Stealth BioTherapeutics Corp (NASDAQ:MITO) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is MITO stock a buy? Money managers were turning bullish. The number of long hedge fund bets moved up by 1 in recent months. Stealth BioTherapeutics Corp (NASDAQ:MITO) was in 4 hedge funds' portfolios at the end of March. The all time high for this statistic is 4. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MITO isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 3 hedge funds in our database with MITO holdings at the end of December.
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 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 115 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
RENAISSANCE TECHNOLOGIES
Jim Simons of Renaissance Technologies
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stockfor $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 take a peek at the fresh hedge fund action surrounding Stealth BioTherapeutics Corp (NASDAQ:MITO).
Do Hedge Funds Think MITO Is A Good Stock To Buy Now?
At first quarter's end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MITO over the last 23 quarters. With hedge funds' sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Is MITO A Good Stock To Buy?
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the number one position in Stealth BioTherapeutics Corp (NASDAQ:MITO), worth close to $1.4 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Ikarian Capital, led by Neil Shahrestani, holding a $1.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions include Hal Mintz's Sabby Capital, Ken Griffin's Citadel Investment Group and . In terms of the portfolio weights assigned to each position Sabby Capital allocated the biggest weight to Stealth BioTherapeutics Corp (NASDAQ:MITO), around 0.09% of its 13F portfolio. Ikarian Capital is also relatively very bullish on the stock, setting aside 0.04 percent of its 13F equity portfolio to MITO.
Now, key hedge funds have jumped into Stealth BioTherapeutics Corp (NASDAQ:MITO) headfirst. Sabby Capital, managed by Hal Mintz, assembled the biggest position in Stealth BioTherapeutics Corp (NASDAQ:MITO). Sabby Capital had $0.5 million invested in the company at the end of the quarter.
Let's now take a look at hedge fund activity in other stocks similar to Stealth BioTherapeutics Corp (NASDAQ:MITO). These stocks are Lake Shore Bancorp, Inc. (NASDAQ:LSBK), Avalon GloboCare Corp. (NASDAQ:AVCO), Charles & Colvard, Ltd. (NASDAQ:CTHR), Volt Information Sciences, Inc. (NYSE:VOLT), Kubient, Inc. (NASDAQ:KBNT), Galmed Pharmaceuticals Ltd (NASDAQ:GLMD), and Lion Group Holding Ltd. (NASDAQ:LGHL). This group of stocks' market valuations are closest to MITO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LSBK,1,294,0 AVCO,2,574,1 CTHR,4,8264,2 VOLT,5,7856,2 KBNT,2,563,0 GLMD,7,11925,1 LGHL,3,2774,-1 Average,3.4,4607,0.7 [/table]
As you can see these stocks had an average of 3.4 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $3 million in MITO's case. Galmed Pharmaceuticals Ltd (NASDAQ:GLMD) is the most popular stock in this table. On the other hand Lake Shore Bancorp, Inc. (NASDAQ:LSBK) is the least popular one with only 1 bullish hedge fund positions. Stealth BioTherapeutics Corp (NASDAQ:MITO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MITO is 61. 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 positive signal but 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 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately MITO wasn't nearly as popular as these 5 stocks and hedge funds that were betting on MITO were disappointed as the stock returned 1.9% since the end of March (through 6/11) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
