The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards SCYNEXIS Inc (NASDAQ:SCYX).
Is SCYX stock a buy? Money managers were in a bearish mood. The number of long hedge fund bets retreated by 1 recently. SCYNEXIS Inc (NASDAQ:SCYX) was in 5 hedge funds' portfolios at the end of March. The all time high for this statistic is 12. Our calculations also showed that SCYX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 6 hedge funds in our database with SCYX holdings at the end of December.
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 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Mark Kingdon - Kingdon Capital
Mark Kingdon of Kingdon Capital
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 analyze the new hedge fund action encompassing SCYNEXIS Inc (NASDAQ:SCYX).
Do Hedge Funds Think SCYX Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the fourth quarter of 2020. On the other hand, there were a total of 4 hedge funds with a bullish position in SCYX a year ago. With the smart money's sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
The largest stake in SCYNEXIS Inc (NASDAQ:SCYX) was held by Kingdon Capital, which reported holding $4.7 million worth of stock at the end of December. It was followed by Two Sigma Advisors with a $2.9 million position. Other investors bullish on the company included DAFNA Capital Management, Citadel Investment Group, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Kingdon Capital allocated the biggest weight to SCYNEXIS Inc (NASDAQ:SCYX), around 0.48% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, designating 0.17 percent of its 13F equity portfolio to SCYX.
Due to the fact that SCYNEXIS Inc (NASDAQ:SCYX) has witnessed declining sentiment from hedge fund managers, it's safe to say that there lies a certain "tier" of hedgies who sold off their full holdings last quarter. Interestingly, Joseph Edelman's Perceptive Advisors cut the largest stake of the "upper crust" of funds tracked by Insider Monkey, totaling an estimated $18.4 million in stock, and Timothy P. Lynch's Stonepine Capital was right behind this move, as the fund sold off about $5.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds last quarter.
Let's go over hedge fund activity in other stocks similar to SCYNEXIS Inc (NASDAQ:SCYX). We will take a look at Super League Gaming, Inc. (NASDAQ:SLGG), Innodata Inc (NASDAQ:INOD), C&F Financial Corp (NASDAQ:CFFI), Bancroft Fund Limited (NYSE:BCV), USD Partners LP (NYSE:USDP), Portman Ridge Finance Corporation (NASDAQ:PTMN), and Usio, Inc. (NASDAQ:USIO). This group of stocks' market values resemble SCYX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SLGG,2,642,1 INOD,4,7206,0 CFFI,2,5942,0 BCV,1,52,0 USDP,2,521,0 PTMN,9,4829,0 USIO,5,19032,1 Average,3.6,5461,0.3 [/table]
As you can see these stocks had an average of 3.6 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $9 million in SCYX's case. Portman Ridge Finance Corporation (NASDAQ:PTMN) is the most popular stock in this table. On the other hand Bancroft Fund Limited (NYSE:BCV) is the least popular one with only 1 bullish hedge fund positions. SCYNEXIS Inc (NASDAQ:SCYX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SCYX is 41.5. 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 positive signal but 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 beat the market again by 6.1 percentage points. Unfortunately SCYX wasn't nearly as popular as these 5 stocks and hedge funds that were betting on SCYX were disappointed as the stock returned -5.5% 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
