In this article you are going to find out whether hedge funds think PolyPid Ltd. (NASDAQ:PYPD) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is PYPD a good stock to buy? PolyPid Ltd. (NASDAQ:PYPD) investors should pay attention to an increase in activity from the world's largest hedge funds of late. PolyPid Ltd. (NASDAQ:PYPD) was in 5 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 5. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PYPD isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Cathie Wood ARK Investment Management
Cathie Wood of ARK Investment Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let's take a look at the key hedge fund action encompassing PolyPid Ltd. (NASDAQ:PYPD).
Do Hedge Funds Think PYPD Is A Good Stock To Buy Now?
At first quarter's end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in PYPD over the last 23 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, ARK Investment Management, managed by Catherine D. Wood, holds the largest position in PolyPid Ltd. (NASDAQ:PYPD). ARK Investment Management has a $5.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On ARK Investment Management's heels is Louis Bacon of Moore Global Investments, with a $2.6 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions contain Devesh Gandhi's SilverArc Capital, Israel Englander's Millennium Management and The Motley Fool's 1623 Capital. In terms of the portfolio weights assigned to each position SilverArc Capital allocated the biggest weight to PolyPid Ltd. (NASDAQ:PYPD), around 0.75% of its 13F portfolio. 1623 Capital is also relatively very bullish on the stock, dishing out 0.03 percent of its 13F equity portfolio to PYPD.
As aggregate interest increased, some big names were breaking ground themselves. SilverArc Capital, managed by Devesh Gandhi, created the most valuable position in PolyPid Ltd. (NASDAQ:PYPD). SilverArc Capital had $1.4 million invested in the company at the end of the quarter. The Motley Fool's 1623 Capital also initiated a $0.1 million position during the quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as PolyPid Ltd. (NASDAQ:PYPD) but similarly valued. These stocks are DiaMedica Therapeutics Inc. (NASDAQ:DMAC), Evofem Biosciences, Inc. (NASDAQ:EVFM), Koss Corporation (NASDAQ:KOSS), Clearsign Technologies Corp (NASDAQ:CLIR), SMTC Corporation (NASDAQ:SMTX), VivoPower International PLC (NASDAQ:VVPR), and NeuBase Therapeutics, Inc. (NASDAQ:NBSE). All of these stocks' market caps resemble PYPD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DMAC,11,35873,-1 EVFM,10,12671,3 KOSS,4,2983,2 CLIR,3,1685,2 SMTX,7,22992,1 VVPR,2,1872,-1 NBSE,11,24315,3 Average,6.9,14627,1.3 [/table]
As you can see these stocks had an average of 6.9 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $10 million in PYPD's case. DiaMedica Therapeutics Inc. (NASDAQ:DMAC) is the most popular stock in this table. On the other hand VivoPower International PLC (NASDAQ:VVPR) is the least popular one with only 2 bullish hedge fund positions. PolyPid Ltd. (NASDAQ:PYPD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PYPD is 52.7. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and surpassed the market again by 6.1 percentage points. Unfortunately PYPD wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); PYPD investors were disappointed as the stock returned 0.5% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
