Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors' money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Is Assembly Biosciences Inc (NASDAQ:ASMB) going to take off soon? Investors who are in the know are turning less bullish. The number of long hedge fund positions shrunk by 1 in recent months. Our calculations also showed that ASMB isn't among the 30 most popular stocks among hedge funds (see the video below). ASMB was in 18 hedge funds' portfolios at the end of June. There were 19 hedge funds in our database with ASMB positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most investors, hedge funds are assumed to be underperforming, outdated financial tools of the past. While there are greater than 8000 funds with their doors open today, Our experts choose to focus on the upper echelon of this club, about 750 funds. These investment experts control most of the smart money's total capital, and by following their top stock picks, Insider Monkey has identified a number of investment strategies that have historically defeated the broader indices. Insider Monkey's flagship hedge fund strategy beat the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike other investors who track every movement of the 25 largest hedge funds, our long-short investment strategy relies on hedge fund buy/sell signals given by the 100 best performing hedge funds. We're going to go over the latest hedge fund action encompassing Assembly Biosciences Inc (NASDAQ:ASMB).
What does smart money think about Assembly Biosciences Inc (NASDAQ:ASMB)?
At Q2's end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ASMB over the last 16 quarters. With the smart money's sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
The largest stake in Assembly Biosciences Inc (NASDAQ:ASMB) was held by Armistice Capital, which reported holding $27 million worth of stock at the end of March. It was followed by Sectoral Asset Management with a $11.4 million position. Other investors bullish on the company included Baker Bros. Advisors, Rock Springs Capital Management, and OrbiMed Advisors.
Because Assembly Biosciences Inc (NASDAQ:ASMB) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there is a sect of money managers that elected to cut their positions entirely in the second quarter. It's worth mentioning that Oleg Nodelman's EcoR1 Capital cut the largest investment of all the hedgies tracked by Insider Monkey, comprising an estimated $22.7 million in stock, and Behzad Aghazadeh's venBio Select Advisor was right behind this move, as the fund dropped about $17.7 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds in the second quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Assembly Biosciences Inc (NASDAQ:ASMB) but similarly valued. We will take a look at resTORbio, Inc. (NASDAQ:TORC), Enterprise Bancorp, Inc (NASDAQ:EBTC), Citizens, Inc. (NYSE:CIA), and Global Medical REIT Inc. (NYSE:GMRE). All of these stocks' market caps resemble ASMB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TORC,3,60634,-3 EBTC,1,1498,0 CIA,2,2171,0 GMRE,13,16801,-3 Average,4.75,20276,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $82 million in ASMB's case. Global Medical REIT Inc. (NYSE:GMRE) is the most popular stock in this table. On the other hand Enterprise Bancorp, Inc (NASDAQ:EBTC) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Assembly Biosciences Inc (NASDAQ:ASMB) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately ASMB wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ASMB were disappointed as the stock returned -27.1% during the third quarter 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 many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.