Antares Pharma Inc (ATRS): Hedge Funds In Wait-and-See Mode

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Antares Pharma Inc (NASDAQ:ATRS) and determine whether hedge funds skillfully traded this stock.

Hedge fund interest in Antares Pharma Inc (NASDAQ:ATRS) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ATRS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Quanex Building Products Corporation (NYSE:NX), DURECT Corporation (NASDAQ:DRRX), and BeyondSpring, Inc. (NASDAQ:BYSI) to gather more data points. Our calculations also showed that ATRS isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Michael Gelband of ExodusPoint Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Now we’re going to check out the new hedge fund action regarding Antares Pharma Inc (NASDAQ:ATRS).

What does smart money think about Antares Pharma Inc (NASDAQ:ATRS)?

At Q2’s end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ATRS over the last 20 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, John Overdeck and David Siegel’s Two Sigma Advisors has the biggest position in Antares Pharma Inc (NASDAQ:ATRS), worth close to $4.5 million, comprising less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, managed by Cliff Asness, which holds a $2.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that hold long positions include Mark Coe’s Intrinsic Edge Capital, Bryan Hinmon’s Motley Fool Asset Management and Joe Riccardo’s Healthcare Value Capital. In terms of the portfolio weights assigned to each position Healthcare Value Capital allocated the biggest weight to Antares Pharma Inc (NASDAQ:ATRS), around 3.51% of its 13F portfolio. Soleus Capital is also relatively very bullish on the stock, designating 0.36 percent of its 13F equity portfolio to ATRS.

Due to the fact that Antares Pharma Inc (NASDAQ:ATRS) has experienced falling interest from hedge fund managers, it’s easy to see that there exists a select few fund managers that decided to sell off their positions entirely last quarter. It’s worth mentioning that Timothy P. Lynch’s Stonepine Capital dropped the largest investment of the “upper crust” of funds watched by Insider Monkey, worth about $0.4 million in stock. Donald Sussman’s fund, Paloma Partners, also said goodbye to its stock, about $0 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Antares Pharma Inc (NASDAQ:ATRS). We will take a look at Quanex Building Products Corporation (NYSE:NX), DURECT Corporation (NASDAQ:DRRX), BeyondSpring, Inc. (NASDAQ:BYSI), SI-BONE, Inc. (NASDAQ:SIBN), Triple-S Management Corp.(NYSE:GTS), The Andersons, Inc. (NASDAQ:ANDE), and Bank of Marin Bancorp (NASDAQ:BMRC). All of these stocks’ market caps are similar to ATRS’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.9 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $19 million in ATRS’s case. SI-BONE, Inc. (NASDAQ:SIBN) is the most popular stock in this table. On the other hand DURECT Corporation (NASDAQ:DRRX) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Antares Pharma Inc (NASDAQ:ATRS) is more popular among hedge funds. Our overall hedge fund sentiment score for ATRS is 35. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. Unfortunately ATRS wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ATRS were disappointed as the stock returned -1.8% during the third 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

Disclosure: None. This article was originally published at Insider Monkey.