Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Pluristem Therapeutics Inc. (NASDAQ:PSTI) to find out whether there were any major changes in hedge funds' views.
Is Pluristem Therapeutics Inc. (NASDAQ:PSTI) going to take off soon? Hedge funds were in a bullish mood. The number of long hedge fund bets advanced by 2 recently. Pluristem Therapeutics Inc. (NASDAQ:PSTI) was in 6 hedge funds' portfolios at the end of September. The all time high for this statistics is 5. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PSTI 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.
At the moment there are a multitude of gauges stock traders have at their disposal to appraise stocks. Two of the most underrated gauges are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can trounce the S&P 500 by a superb margin (see the details here).
Gavin Saitowitz of Prelude Capital
Gavin Saitowitz of Prelude Capital
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. Now we're going to go over the latest hedge fund action surrounding Pluristem Therapeutics Inc. (NASDAQ:PSTI).
What does smart money think about Pluristem Therapeutics Inc. (NASDAQ:PSTI)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from one quarter earlier. By comparison, 3 hedge funds held shares or bullish call options in PSTI a year ago. With the smart money's sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Citadel Investment Group was the largest shareholder of Pluristem Therapeutics Inc. (NASDAQ:PSTI), with a stake worth $1.6 million reported as of the end of September. Trailing Citadel Investment Group was Renaissance Technologies, which amassed a stake valued at $0.8 million. Sabby Capital, Millennium Management, 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 Sabby Capital allocated the biggest weight to Pluristem Therapeutics Inc. (NASDAQ:PSTI), around 0.09% of its 13F portfolio. Springbok Capital is also relatively very bullish on the stock, designating 0.0033 percent of its 13F equity portfolio to PSTI.
As one would reasonably expect, key money managers have jumped into Pluristem Therapeutics Inc. (NASDAQ:PSTI) headfirst. Renaissance Technologies, created the most valuable position in Pluristem Therapeutics Inc. (NASDAQ:PSTI). Renaissance Technologies had $0.8 million invested in the company at the end of the quarter. John Overdeck and David Siegel's Two Sigma Advisors also made a $0.3 million investment in the stock during the quarter. The other funds with brand new PSTI positions are Ken Griffin's Citadel Investment Group and Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Pluristem Therapeutics Inc. (NASDAQ:PSTI) but similarly valued. We will take a look at Leju Holdings Ltd (NYSE:LEJU), Cresud Sociedad Anonima Comercial, Inmobiliaria, Financiera y Agropecuaria (NASDAQ:CRESY), Oil-Dri Corporation of America (NYSE:ODC), Hamilton Beach Brands Holding Company (NYSE:HBB), Verso Corporation (NYSE:VRS), Selecta Biosciences, Inc. (NASDAQ:SELB), and Turtle Beach Corp (NASDAQ:HEAR). All of these stocks' market caps are closest to PSTI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LEJU,2,2788,-1 CRESY,4,6834,-3 ODC,4,32322,-1 HBB,8,5936,1 VRS,15,50832,0 SELB,18,63282,-1 HEAR,13,39126,0 Average,9.1,28731,-0.7 [/table]
As you can see these stocks had an average of 9.1 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $2 million in PSTI's case. Selecta Biosciences, Inc. (NASDAQ:SELB) is the most popular stock in this table. On the other hand Leju Holdings Ltd (NYSE:LEJU) is the least popular one with only 2 bullish hedge fund positions. Pluristem Therapeutics Inc. (NASDAQ:PSTI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PSTI is 49.5. 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 30.7% in 2020 through November 27th and surpassed the market again by 16.1 percentage points. Unfortunately PSTI wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PSTI investors were disappointed as the stock returned -9% since the end of September (through 11/27) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
