Is LogicBio Therapeutics, Inc. (LOGC) Going to Burn These Hedge Funds?
Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of LogicBio Therapeutics, Inc. (NASDAQ:LOGC).
LogicBio Therapeutics, Inc. (NASDAQ:LOGC) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that LOGC 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). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Fathom Holdings Inc. (NASDAQ:FTHM), Haynes International, Inc. (NASDAQ:HAYN), and Alico, Inc. (NASDAQ:ALCO) to gather more data points.
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.
Robert Pohly of Samlyn 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 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. Keeping this in mind let's view the new hedge fund action surrounding LogicBio Therapeutics, Inc. (NASDAQ:LOGC).
What have hedge funds been doing with LogicBio Therapeutics, Inc. (NASDAQ:LOGC)?
At third quarter's end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LOGC over the last 21 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, OrbiMed Advisors, managed by Samuel Isaly, holds the biggest position in LogicBio Therapeutics, Inc. (NASDAQ:LOGC). OrbiMed Advisors has a $58.7 million position in the stock, comprising 0.7% of its 13F portfolio. The second largest stake is held by Samlyn Capital, managed by Robert Pohly, which holds a $7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism encompass Didric Cederholm's Lion Point, Israel Englander's Millennium Management and . In terms of the portfolio weights assigned to each position Lion Point allocated the biggest weight to LogicBio Therapeutics, Inc. (NASDAQ:LOGC), around 1% of its 13F portfolio. OrbiMed Advisors is also relatively very bullish on the stock, designating 0.74 percent of its 13F equity portfolio to LOGC.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Adage Capital Management. 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 Millennium Management).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as LogicBio Therapeutics, Inc. (NASDAQ:LOGC) but similarly valued. We will take a look at Fathom Holdings Inc. (NASDAQ:FTHM), Haynes International, Inc. (NASDAQ:HAYN), Alico, Inc. (NASDAQ:ALCO), PennantPark Investment Corp. (NASDAQ:PNNT), MICT, Inc. (NASDAQ:MICT), Commercial Vehicle Group, Inc. (NASDAQ:CVGI), and Horizon Technology Finance Corp (NASDAQ:HRZN). This group of stocks' market valuations match LOGC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FTHM,3,5099,3 HAYN,14,30370,1 ALCO,7,16369,0 PNNT,6,7914,0 MICT,2,263,1 CVGI,12,35587,-1 HRZN,2,2270,0 Average,6.6,13982,0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.6 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $70 million in LOGC's case. Haynes International, Inc. (NASDAQ:HAYN) is the most popular stock in this table. On the other hand MICT, Inc. (NASDAQ:MICT) is the least popular one with only 2 bullish hedge fund positions. LogicBio Therapeutics, Inc. (NASDAQ:LOGC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LOGC is 30.5. 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 LOGC wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); LOGC investors were disappointed as the stock returned -27.4% 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.
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