Where Do Hedge Funds Stand On electroCore, Inc. (ECOR)?
Debasis Saha
6 min read
Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about electroCore, Inc. (NASDAQ:ECOR) in this article.
Is electroCore, Inc. (NASDAQ:ECOR) a healthy stock for your portfolio? Money managers were becoming hopeful. The number of bullish hedge fund bets improved by 2 recently. electroCore, Inc. (NASDAQ:ECOR) was in 5 hedge funds' portfolios at the end of March. The all time high for this statistic is 9. Our calculations also showed that ECOR isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 3 hedge funds in our database with ECOR holdings at the end of December.
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.
John Overdeck of Two Sigma
John Overdeck of Two Sigma Advisors
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. With all of this in mind we're going to take a look at the key hedge fund action regarding electroCore, Inc. (NASDAQ:ECOR).
Do Hedge Funds Think ECOR Is A Good Stock To Buy Now?
At the end of March, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 67% from one quarter earlier. By comparison, 2 hedge funds held shares or bullish call options in ECOR a year ago. With hedgies' sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Is ECOR A Good Stock To Buy?
More specifically, Two Sigma Advisors was the largest shareholder of electroCore, Inc. (NASDAQ:ECOR), with a stake worth $0.5 million reported as of the end of March. Trailing Two Sigma Advisors was Renaissance Technologies, which amassed a stake valued at $0.5 million. Laurion Capital Management, Citadel Investment Group, and Millennium Management 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 Two Sigma Advisors allocated the biggest weight to electroCore, Inc. (NASDAQ:ECOR), around 0.0012% of its 13F portfolio. Laurion Capital Management is also relatively very bullish on the stock, designating 0.001 percent of its 13F equity portfolio to ECOR.
As aggregate interest increased, key hedge funds have been driving this bullishness. Two Sigma Advisors, managed by John Overdeck and David Siegel, assembled the largest position in electroCore, Inc. (NASDAQ:ECOR). Two Sigma Advisors had $0.5 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0.1 million investment in the stock during the quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as electroCore, Inc. (NASDAQ:ECOR) but similarly valued. We will take a look at Huttig Building Products, Inc. (NASDAQ:HBP), Soleno Therapeutics, Inc. (NASDAQ:SLNO), Castor Maritime Inc. (NASDAQ:CTRM), Oragenics Inc. (NYSE:OGEN), DAVIDsTEA Inc. (NASDAQ:DTEA), Summit State Bank (NASDAQ:SSBI), and Cocrystal Pharma, Inc. (NASDAQ:COCP). This group of stocks' market valuations match ECOR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HBP,3,10764,0 SLNO,8,11931,-4 CTRM,1,5174,-3 OGEN,1,336,0 DTEA,3,451,1 SSBI,1,202,0 COCP,1,5914,-2 Average,2.6,4967,-1.1 [/table]
As you can see these stocks had an average of 2.6 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $1 million in ECOR's case. Soleno Therapeutics, Inc. (NASDAQ:SLNO) is the most popular stock in this table. On the other hand Castor Maritime Inc. (NASDAQ:CTRM) is the least popular one with only 1 bullish hedge fund positions. electroCore, Inc. (NASDAQ:ECOR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ECOR is 52.2. 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 ECOR wasn't nearly as popular as these 5 stocks and hedge funds that were betting on ECOR were disappointed as the stock returned -22.8% 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.
