Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Aclaris Therapeutics Inc (NASDAQ:ACRS) was in 12 hedge funds’ portfolios at the end of the third quarter of 2016. ACRS investors should pay attention to an increase in hedge fund interest in recent months. There were 4 hedge funds in our database with ACRS positions at the end of the previous quarter. At the end of this article we will also compare ACRS to other stocks including Otonomy Inc (NASDAQ:OTIC), Titan International Inc (NYSE:TWI), and ConnectOne Bancorp Inc (NASDAQ:CNOB) to get a better sense of its popularity.
Follow Aclaris Therapeutics Inc. (NASDAQ:ACRS)
Follow Aclaris Therapeutics Inc. (NASDAQ:ACRS)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
With all of this in mind, let’s analyze the key action surrounding Aclaris Therapeutics Inc (NASDAQ:ACRS).
What have hedge funds been doing with Aclaris Therapeutics Inc (NASDAQ:ACRS)?
Heading into the fourth quarter of 2016, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a massive jump of 200% from the previous quarter. By comparison, 3 hedge funds held shares or bullish call options in ACRS heading into this year. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Peter Kolchinsky’s RA Capital Management has the biggest position in Aclaris Therapeutics Inc (NASDAQ:ACRS), worth close to $39.6 million, comprising 4.1% of its total 13F portfolio. Coming in second is Rock Springs Capital Management, led by Kris Jenner, Gordon Bussard, Graham McPhail, holding a $26 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish consist of Bihua Chen’s Cormorant Asset Management, Joseph Edelman’s Perceptive Advisors and Richard Driehaus’s Driehaus Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As one would reasonably expect, key money managers were breaking ground themselves. Perceptive Advisors, led by Joseph Edelman, created the biggest position in Aclaris Therapeutics Inc (NASDAQ:ACRS). According to regulatory filings, the fund had $11 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also made a $4.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Greenberg and David Kim’s Ghost Tree Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and James E. Flynn’s Deerfield Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Aclaris Therapeutics Inc (NASDAQ:ACRS) but similarly valued. We will take a look at Otonomy Inc (NASDAQ:OTIC), Titan International Inc (NYSE:TWI), ConnectOne Bancorp Inc (NASDAQ:CNOB), and Ellington Financial LLC (NYSE:EFC). This group of stocks’ market values match ACRS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OTIC | 11 | 84280 | -1 |
| TWI | 15 | 122943 | 2 |
| CNOB | 7 | 20010 | -1 |
| EFC | 3 | 39557 | -2 |
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $119 million in ACRS’s case. Titan International Inc (NYSE:TWI) is the most popular stock in this table. On the other hand Ellington Financial LLC (NYSE:EFC) is the least popular one with only 3 bullish hedge fund positions. Aclaris Therapeutics Inc (NASDAQ:ACRS) 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 TWI might be a better candidate to consider taking a long position in.
Disclosure: none.
