Zynerba Pharmaceuticals Inc (ZYNE): Hedge Funds Are Nibbling
Debasis Saha
5 min read
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. What do these smart investors think about Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE)?
Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE) investors should pay attention to an increase in activity from the world's largest hedge funds of late. ZYNE was in 7 hedge funds' portfolios at the end of the first quarter of 2020. There were 6 hedge funds in our database with ZYNE positions at the end of the previous quarter. Our calculations also showed that ZYNE 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 a multitude of signals investors employ to assess their holdings. Some of the most under-the-radar signals are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the elite investment managers can beat the S&P 500 by a solid margin (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to analyze the key hedge fund action encompassing Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE).
Hedge fund activity in Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE)
Heading into the second quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from one quarter earlier. On the other hand, there were a total of 3 hedge funds with a bullish position in ZYNE a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Is ZYNE A Good Stock To Buy?
Among these funds, Portolan Capital Management held the most valuable stake in Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE), which was worth $1.7 million at the end of the third quarter. On the second spot was Prentice Capital Management which amassed $1.3 million worth of shares. Sphera Global Healthcare Fund, OZ Management, and Citadel Investment Group 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 Prentice Capital Management allocated the biggest weight to Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE), around 0.62% of its 13F portfolio. Portolan Capital Management is also relatively very bullish on the stock, dishing out 0.25 percent of its 13F equity portfolio to ZYNE.
Now, key money managers have been driving this bullishness. Sphera Global Healthcare Fund, managed by Doron Breen and Mori Arkin, assembled the most valuable position in Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE). Sphera Global Healthcare Fund had $0.4 million invested in the company at the end of the quarter. Peter Algert and Kevin Coldiron's Algert Coldiron Investors also made a $0.1 million investment in the stock during the quarter.
Let's now review hedge fund activity in other stocks similar to Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE). These stocks are TELA Bio, Inc. (NASDAQ:TELA), Valaris Plc (NYSE:VAL), SB Financial Group, Inc. (NASDAQ:SBFG), and Alithya Group inc. (NASDAQ:ALYA). This group of stocks' market valuations resemble ZYNE's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TELA,8,27380,0 VAL,14,37814,-6 SBFG,4,8846,0 ALYA,5,7426,0 Average,7.75,20367,-1.5 [/table]
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $4 million in ZYNE's case. Valaris Plc (NYSE:VAL) is the most popular stock in this table. On the other hand SB Financial Group, Inc. (NASDAQ:SBFG) is the least popular one with only 4 bullish hedge fund positions. Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE) is not the least popular stock in this group but hedge fund interest is still below 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on ZYNE as the stock returned 36% during the second quarter and outperformed the market by an even larger margin.
