Is ISEE Stock A Buy or Sell?
In this article we will take a look at whether hedge funds think IVERIC bio, Inc. (NASDAQ:ISEE) 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.
Is ISEE stock a buy? IVERIC bio, Inc. (NASDAQ:ISEE) was in 29 hedge funds' portfolios at the end of December. The all time high for this statistic is 38. ISEE has seen an increase in enthusiasm from smart money recently. There were 26 hedge funds in our database with ISEE positions at the end of the third quarter. Our calculations also showed that ISEE isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 124 percentage points since March 2017 (see the details here).
Michael Gelband of ExodusPoint Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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. With all of this in mind let's analyze the key hedge fund action encompassing IVERIC bio, Inc. (NASDAQ:ISEE).
Do Hedge Funds Think ISEE Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ISEE over the last 22 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Avoro Capital Advisors (venBio Select Advisor) held the most valuable stake in IVERIC bio, Inc. (NASDAQ:ISEE), which was worth $50.1 million at the end of the fourth quarter. On the second spot was Vivo Capital which amassed $41.2 million worth of shares. Deerfield Management, Perceptive Advisors, and Citadel Investment Group 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 Burrage Capital Management allocated the biggest weight to IVERIC bio, Inc. (NASDAQ:ISEE), around 7.31% of its 13F portfolio. Commodore Capital is also relatively very bullish on the stock, dishing out 4.79 percent of its 13F equity portfolio to ISEE.
Now, some big names have been driving this bullishness. Commodore Capital, managed by Egen Atkinson and Michael Kramarz, created the largest position in IVERIC bio, Inc. (NASDAQ:ISEE). Commodore Capital had $8.8 million invested in the company at the end of the quarter. Ting Jia's Octagon Capital Advisors also made a $4.7 million investment in the stock during the quarter. The other funds with brand new ISEE positions are Jonathan Guo's Yiheng Capital, Devesh Gandhi's SilverArc Capital, and Michael Gelband's ExodusPoint Capital.
Let's now take a look at hedge fund activity in other stocks similar to IVERIC bio, Inc. (NASDAQ:ISEE). We will take a look at Ruth's Hospitality Group, Inc. (NASDAQ:RUTH), UMH Properties, Inc (NYSE:UMH), Interface, Inc. (NASDAQ:TILE), Arlo Technologies, Inc. (NYSE:ARLO), Rubius Therapeutics, Inc. (NASDAQ:RUBY), ReneSola Ltd. (NYSE:SOL), and Navigator Holdings Ltd (NYSE:NVGS). All of these stocks' market caps resemble ISEE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RUTH,11,74228,0 UMH,5,6757,-3 TILE,13,30841,-4 ARLO,17,53968,1 RUBY,9,4489,-1 SOL,3,138352,-2 NVGS,19,51246,3 Average,11,51412,-0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $322 million in ISEE's case. Navigator Holdings Ltd (NYSE:NVGS) is the most popular stock in this table. On the other hand ReneSola Ltd. (NYSE:SOL) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks IVERIC bio, Inc. (NASDAQ:ISEE) is more popular among hedge funds. Our overall hedge fund sentiment score for ISEE is 80.9. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Unfortunately ISEE wasn't nearly as popular as these 30 stocks and hedge funds that were betting on ISEE were disappointed as the stock returned -17.7% since the end of the fourth quarter (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most 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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