We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Adamis Pharmaceuticals Corporation (NASDAQ:ADMP).
Is Adamis Pharmaceuticals Corporation (NASDAQ:ADMP) a great investment right now? Investors who are in the know are taking a bullish view. The number of bullish hedge fund positions inched up by 2 recently. Our calculations also showed that ADMP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Marshall of Marshall Wace
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind we’re going to take a gander at the latest hedge fund action encompassing Adamis Pharmaceuticals Corporation (NASDAQ:ADMP).
How are hedge funds trading Adamis Pharmaceuticals Corporation (NASDAQ:ADMP)?
Heading into the fourth quarter of 2019, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from the second quarter of 2019. By comparison, 3 hedge funds held shares or bullish call options in ADMP a year ago. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ari Zweiman’s 683 Capital Partners has the largest position in Adamis Pharmaceuticals Corporation (NASDAQ:ADMP), worth close to $1.4 million, accounting for 0.2% of its total 13F portfolio. The second most bullish fund manager is Sabby Capital, managed by Hal Mintz, which holds a $0.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions include Paul Marshall and Ian Wace’s Marshall Wace, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position 683 Capital Partners allocated the biggest weight to Adamis Pharmaceuticals Corporation (NASDAQ:ADMP), around 0.15% of its 13F portfolio. Sabby Capital is also relatively very bullish on the stock, setting aside 0.07 percent of its 13F equity portfolio to ADMP.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Sabby Capital, managed by Hal Mintz, created the largest position in Adamis Pharmaceuticals Corporation (NASDAQ:ADMP). Sabby Capital had $0.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace also made a $0 million investment in the stock during the quarter. The only other fund with a brand new ADMP position is Israel Englander’s Millennium Management.
Let’s go over hedge fund activity in other stocks similar to Adamis Pharmaceuticals Corporation (NASDAQ:ADMP). These stocks are Proteostasis Therapeutics, Inc. (NASDAQ:PTI), Francesca’s Holdings Corp (NASDAQ:FRAN), iMedia Brands, Inc. (NASDAQ:IMBI), and Riot Blockchain, Inc (NASDAQ:RIOT). This group of stocks’ market caps resemble ADMP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PTI | 7 | 3518 | 0 |
| FRAN | 8 | 6199 | 0 |
| IMBI | 4 | 2312 | 1 |
| RIOT | 1 | 117 | 0 |
| Average | 5 | 3037 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $2 million in ADMP’s case. Francesca’s Holdings Corp (NASDAQ:FRAN) is the most popular stock in this table. On the other hand Riot Blockchain, Inc (NASDAQ:RIOT) is the least popular one with only 1 bullish hedge fund positions. Adamis Pharmaceuticals Corporation (NASDAQ:ADMP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately ADMP wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ADMP investors were disappointed as the stock returned -17.1% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
