Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 817 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about iBio, Inc. (NYSE:IBIO).
Is iBio, Inc. (NYSE:IBIO) a healthy stock for your portfolio? Prominent investors were getting more optimistic. The number of long hedge fund positions increased by 1 lately. iBio, Inc. (NYSE:IBIO) was in 3 hedge funds' portfolios at the end of September. The all time high for this statistics is 3. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that IBIO 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
David Harding of Winton Capital Management
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 10 most profitable companies in the world 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 fresh hedge fund action encompassing iBio, Inc. (NYSE:IBIO).
What have hedge funds been doing with iBio, Inc. (NYSE:IBIO)?
At third quarter's end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the previous quarter. By comparison, 1 hedge funds held shares or bullish call options in IBIO a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in iBio, Inc. (NYSE:IBIO) was held by Millennium Management, which reported holding $0.5 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $0.5 million position. The only other hedge fund that is bullish on the company was AQR Capital Management.
As one would reasonably expect, some big names were breaking ground themselves. AQR Capital Management, managed by Cliff Asness, created the largest position in iBio, Inc. (NYSE:IBIO). AQR Capital Management had $0.3 million invested in the company at the end of the quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as iBio, Inc. (NYSE:IBIO) but similarly valued. These stocks are The First of Long Island Corporation (NASDAQ:FLIC), Hoegh LNG Partners LP (NYSE:HMLP), Customers Bancorp Inc (NYSE:CUBI), IMARA Inc. (NASDAQ:IMRA), Alliance Resource Partners, L.P. (NASDAQ:ARLP), Dynex Capital Inc (NYSE:DX), and MRC Global Inc (NYSE:MRC). This group of stocks' market valuations are similar to IBIO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FLIC,10,22272,-1 HMLP,5,12459,0 CUBI,10,12964,-5 IMRA,5,78482,-1 ARLP,4,16859,0 DX,8,7739,4 MRC,18,26533,0 Average,8.6,25330,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.6 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $1 million in IBIO's case. MRC Global Inc (NYSE:MRC) is the most popular stock in this table. On the other hand Alliance Resource Partners, L.P. (NASDAQ:ARLP) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks iBio, Inc. (NYSE:IBIO) is even less popular than ARLP. Our overall hedge fund sentiment score for IBIO is 36. 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. Hedge funds dodged a bullet by taking a bearish stance towards IBIO. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd but managed to beat the market again by 15.4 percentage points. Unfortunately IBIO wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); IBIO investors were disappointed as the stock returned -27.6% since the end of the third quarter (through 11/23) 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 so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.