How do we determine whether Dynavax Technologies Corporation (NASDAQ: DVAX ) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Dynavax Technologies Corporation (NASDAQ: DVAX ) investors should be aware of a decrease in activity from the world's largest hedge funds recently. Our calculations also showed that DVAX isn't among the 30 most popular stocks among hedge funds .
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception ( see the details here ). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We're going to check out the key hedge fund action encompassing Dynavax Technologies Corporation (NASDAQ: DVAX ).
Hedge fund activity in Dynavax Technologies Corporation (NASDAQ:DVAX)
At Q4's end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DVAX over the last 14 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Healthcor Management LP held the most valuable stake in Dynavax Technologies Corporation (NASDAQ:DVAX), which was worth $38.6 million at the end of the fourth quarter. On the second spot was Rima Senvest Management which amassed $28.3 million worth of shares. Moreover, D E Shaw, Farallon Capital, and Brookside Capital were also bullish on Dynavax Technologies Corporation (NASDAQ:DVAX), allocating a large percentage of their portfolios to this stock.
Because Dynavax Technologies Corporation (NASDAQ:DVAX) has witnessed a decline in interest from the smart money, logic holds that there lies a certain "tier" of hedge funds who sold off their positions entirely by the end of the third quarter. Interestingly, Zach Schreiber's Point State Capital said goodbye to the biggest stake of the 700 funds tracked by Insider Monkey, worth about $16.3 million in stock, and Steve Cohen's Point72 Asset Management was right behind this move, as the fund dropped about $1.8 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 1 funds by the end of the third quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Dynavax Technologies Corporation (NASDAQ:DVAX) but similarly valued. We will take a look at W&T Offshore, Inc. (NYSE: WTI ), Triumph Group Inc (NYSE: TGI ), Blue Hills Bancorp Inc (NASDAQ: BHBK ), and HomeStreet Inc (NASDAQ: HMST ). All of these stocks' market caps resemble DVAX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WTI,21,56548,4 TGI,8,16478,1 BHBK,7,19541,-2 HMST,7,6175,1 Average,10.75,24686,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $137 million in DVAX's case. W&T Offshore, Inc. (NYSE: WTI ) is the most popular stock in this table. On the other hand Blue Hills Bancorp Inc (NASDAQ: BHBK ) is the least popular one with only 7 bullish hedge fund positions. Dynavax Technologies Corporation (NASDAQ:DVAX) is not the most popular stock in this group but hedge fund interest is still above average. 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 15 most popular stocks ) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately DVAX wasn't nearly as popular as these 15 stock and hedge funds that were betting on DVAX were disappointed as the stock returned -30.5% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks ) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey .