In this article we will check out the progression of hedge fund sentiment towards ObsEva SA (NASDAQ:OBSV) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
ObsEva SA (NASDAQ:OBSV) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 8 hedge funds' portfolios at the end of March. 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 Caledonia Mining Corporation Plc (NYSE:CMCL), Northeast Bank (NASDAQ:NBN), and Soleno Therapeutics, Inc. (NASDAQ:SLNO) to gather more data points. Our calculations also showed that OBSV isn't among the 30 most popular stocks among hedge funds (click for Q1 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 numerous metrics investors put to use to grade stocks. A couple of the most innovative metrics are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can outperform their index-focused peers by a solid amount (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let's take a look at the key hedge fund action encompassing ObsEva SA (NASDAQ:OBSV).
What have hedge funds been doing with ObsEva SA (NASDAQ:OBSV)?
At Q1's end, a total of 8 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 OBSV over the last 18 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, OrbiMed Advisors was the largest shareholder of ObsEva SA (NASDAQ:OBSV), with a stake worth $6.3 million reported as of the end of September. Trailing OrbiMed Advisors was Rock Springs Capital Management, which amassed a stake valued at $3.4 million. Point72 Asset Management, Renaissance Technologies, and Ikarian Capital 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 Rock Springs Capital Management allocated the biggest weight to ObsEva SA (NASDAQ:OBSV), around 0.14% of its 13F portfolio. OrbiMed Advisors is also relatively very bullish on the stock, setting aside 0.11 percent of its 13F equity portfolio to OBSV.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the first quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now review hedge fund activity in other stocks similar to ObsEva SA (NASDAQ:OBSV). We will take a look at Caledonia Mining Corporation Plc (NYSE:CMCL), Northeast Bank (NASDAQ:NBN), Soleno Therapeutics, Inc. (NASDAQ:SLNO), and B Communications Ltd (NASDAQ:BCOM). This group of stocks' market values are similar to OBSV's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CMCL,3,2199,2 NBN,6,18679,1 SLNO,9,19054,4 BCOM,1,62,0 Average,4.75,9999,1.75 [/table]
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 $10 million. That figure was $12 million in OBSV's case. Soleno Therapeutics, Inc. (NASDAQ:SLNO) is the most popular stock in this table. On the other hand B Communications Ltd (NASDAQ:BCOM) is the least popular one with only 1 bullish hedge fund positions. ObsEva SA (NASDAQ:OBSV) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but still beat the market by 14.8 percentage points. Hedge funds were also right about betting on OBSV as the stock returned 125.3% in Q2 (through June 17th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
