In this article we will take a look at whether hedge funds think Pluristem Therapeutics Inc. (NASDAQ:PSTI) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Pluristem Therapeutics Inc. (NASDAQ:PSTI) was in 5 hedge funds' portfolios at the end of March. PSTI shareholders have witnessed an increase in hedge fund sentiment of late. There were 2 hedge funds in our database with PSTI holdings at the end of the previous quarter. Our calculations also showed that PSTI isn't among the 30 most popular stocks among hedge funds (click for Q1 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 51 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one as well as this tiny cannabis play. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a look at the new hedge fund action surrounding Pluristem Therapeutics Inc. (NASDAQ:PSTI).
How are hedge funds trading Pluristem Therapeutics Inc. (NASDAQ:PSTI)?
At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 150% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PSTI over the last 18 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the number one position in Pluristem Therapeutics Inc. (NASDAQ:PSTI), worth close to $0.9 million, amounting to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Sabby Capital, led by Hal Mintz, holding a $0.7 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining peers that are bullish comprise Ken Griffin's Citadel Investment Group, Peter Algert and Kevin Coldiron's Algert Coldiron Investors and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Sabby Capital allocated the biggest weight to Pluristem Therapeutics Inc. (NASDAQ:PSTI), around 0.29% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to PSTI.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls' herd. Citadel Investment Group, managed by Ken Griffin, assembled the most outsized position in Pluristem Therapeutics Inc. (NASDAQ:PSTI). Citadel Investment Group had $0.2 million invested in the company at the end of the quarter. Peter Algert and Kevin Coldiron's Algert Coldiron Investors also made a $0.1 million investment in the stock during the quarter. The only other fund with a new position in the stock is John A. Levin's Levin Capital Strategies.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Pluristem Therapeutics Inc. (NASDAQ:PSTI) but similarly valued. These stocks are United-Guardian, Inc. (NASDAQ:UG), Guaranty Federal Bancshares, Inc. (NASDAQ:GFED), Northern Technologies International Corp (NASDAQ:NTIC), and T2 Biosystems Inc (NASDAQ:TTOO). This group of stocks' market valuations are similar to PSTI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UG,2,5998,0 GFED,2,2234,0 NTIC,4,4491,0 TTOO,2,238,-2 Average,2.5,3240,-0.5 [/table]
As you can see these stocks had an average of 2.5 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $2 million in PSTI's case. Northern Technologies International Corp (NASDAQ:NTIC) is the most popular stock in this table. On the other hand United-Guardian, Inc. (NASDAQ:UG) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Pluristem Therapeutics Inc. (NASDAQ:PSTI) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on PSTI as the stock returned 118.8% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
