ACADIA Pharmaceuticals Inc. (ACAD): Are Hedge Funds Right About This Stock?

Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD).

Is ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) undervalued? The smart money is taking a pessimistic view. The number of bullish hedge fund positions were cut by 2 lately. At the end of this article we will also compare ACAD to other stocks including Owens-Illinois Inc (NYSE:OI), Companhia Brasileira de Distrib. (ADR) (NYSE:CBD), and Radian Group Inc (NYSE:RDN) to get a better sense of its popularity.

With all of this in mind, we’re going to go over the recent action encompassing ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD).

How have hedgies been trading ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD)?

At Q3’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the previous quarter. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Julian Baker and Felix Baker’s Baker Bros. Advisors has the largest position in ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), worth close to $677.3 million, amounting to 6.3% of its total 13F portfolio. Sitting at the No. 2 spot is Steve Cohen of Point72 Asset Management, with a $66.5 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other peers that are bullish comprise Ken Griffin’s Citadel Investment Group, Jacob Gottlieb’s Visium Asset Management and Israel Englander’s Millennium Management.

Due to the fact that ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) has faced falling interest from the smart money, it’s safe to say that there exists a select few hedge funds who were dropping their positions entirely in the third quarter. It’s worth mentioning that Paul Sinclair’s Blue Jay Capital Management sold off the biggest position of the 700 funds monitored by Insider Monkey, worth close to $12.6 million in stock. Richard Driehaus’ fund, Driehaus Capital, also dumped its stock, about $2.5 million worth. These transactions are interesting, as total hedge fund interest dropped by 2 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) but similarly valued. We will take a look at Owens-Illinois Inc (NYSE:OI), Companhia Brasileira de Distrib. (ADR) (NYSE:CBD), Radian Group Inc (NYSE:RDN), and Corelogic Inc (NYSE:CLGX). This group of stocks’ market valuations match ACAD’s market valuation.

As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $521 million. That figure was $934 million in ACAD’s case. Radian Group Inc (NYSE:RDN) is the most popular stock in this table. On the other hand Companhia Brasileira de Distrib. (ADR) (NYSE:CBD) is the least popular one with only 8 bullish hedge fund positions. ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) 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. In this regard RDN might be a better candidate to consider a long position.