Is Hoth Therapeutics, Inc. (HOTH) A Good Stock To Buy Now?
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 Hoth Therapeutics, Inc. (NASDAQ:HOTH) to find out whether there were any major changes in hedge funds' views.
Is HOTH a good stock to buy? Hedge fund interest in Hoth Therapeutics, Inc. (NASDAQ:HOTH) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that HOTH isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare HOTH to other stocks including Acer Therapeutics Inc. (NASDAQ:ACER), A. H. Belo Corporation (NYSE:AHC), and Global Self Storage, Inc. (NASDAQ:SELF) to get a better sense of its popularity.
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David Siegel of Two Sigma Advisors
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Do Hedge Funds Think HOTH Is A Good Stock To Buy Now?
At first quarter's end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in HOTH over the last 23 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Steven Boyd's Armistice Capital has the most valuable position in Hoth Therapeutics, Inc. (NASDAQ:HOTH), worth close to $4.5 million, comprising 0.1% of its total 13F portfolio. On Armistice Capital's heels is Renaissance Technologies, holding a $0.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. In terms of the portfolio weights assigned to each position Armistice Capital allocated the biggest weight to Hoth Therapeutics, Inc. (NASDAQ:HOTH), around 0.1% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.0005 percent of its 13F equity portfolio to HOTH.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Two Sigma Advisors. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Armistice Capital).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Hoth Therapeutics, Inc. (NASDAQ:HOTH) but similarly valued. We will take a look at Acer Therapeutics Inc. (NASDAQ:ACER), A. H. Belo Corporation (NYSE:AHC), Global Self Storage, Inc. (NASDAQ:SELF), Lixte Biotechnology Holdings, Inc. (NASDAQ:LIXT), NetSol Technologies Inc. (NASDAQ:NTWK), Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX), and Flanigan's Enterprises, Inc. (NYSE:BDL). This group of stocks' market caps match HOTH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ACER,3,3167,-1 AHC,6,4126,1 SELF,1,330,0 LIXT,2,469,1 NTWK,2,3108,-1 CPIX,4,3009,1 BDL,1,1403,0 Average,2.7,2230,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.7 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $5 million in HOTH's case. A. H. Belo Corporation (NYSE:AHC) is the most popular stock in this table. On the other hand Global Self Storage, Inc. (NASDAQ:SELF) is the least popular one with only 1 bullish hedge fund positions. Hoth Therapeutics, Inc. (NASDAQ:HOTH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HOTH is 55. 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 HOTH wasn't nearly as popular as these 5 stocks and hedge funds that were betting on HOTH were disappointed as the stock returned -19.3% 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.
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