To many of your fellow readers, hedge funds are assumed to be useless, old investment vehicles of a period lost to current times. Although there are more than 8,000 hedge funds trading currently, Insider Monkey looks at the moguls of this group, around 525 funds. It is assumed that this group has its hands on the lion’s share of all hedge funds’ total capital, and by tracking their highest quality picks, we’ve brought to light a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Just as crucial, positive insider trading activity is another way to analyze the investments you’re interested in. There are a variety of reasons for an upper level exec to downsize shares of his or her company, but only one, very obvious reason why they would behave bullishly. Various academic studies have demonstrated the market-beating potential of this tactic if investors understand where to look (learn more here).
Now that that’s out of the way, let’s discuss the recent info surrounding Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL).
How are hedge funds trading Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL)?
Heading into Q3, a total of 27 of the hedge funds we track were long in this stock, a change of 0% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes substantially.
According to our 13F database, Deerfield Management, managed by James E. Flynn, holds the most valuable position in Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL). Deerfield Management has a $80.7 million position in the stock, comprising 3.8% of its 13F portfolio. Coming in second is Palo Alto Investors, managed by William Leland Edwards, which held a $47.4 million position; 5.6% of its 13F portfolio is allocated to the company. Remaining hedge funds that hold long positions include Ken Griffin’s Citadel Investment Group, Robert Pohly’s Samlyn Capital and Jim Simons’s Renaissance Technologies.
As Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL) has experienced a fall in interest from the top-tier hedge fund industry, we can see that there were a few funds that elected to cut their positions entirely in Q1. Intriguingly, Julian Baker and Felix Baker’s Baker Bros. Advisors dumped the biggest investment of the 450+ funds we key on, comprising close to $36.5 million in stock, and Sanford J. Colen of Apex Capital was right behind this move, as the fund sold off about $5.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
How are insiders trading Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL)?
Legal insider trading, particularly when it’s bullish, is most useful when the company we’re looking at has experienced transactions within the past six months. Over the last half-year time frame, Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll also take a look at the relationship between both of these indicators in other stocks similar to Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL). These stocks are Herbalife Ltd. (NYSE:HLF), Nature’s Sunshine Prod. (NASDAQ:NATR), Lifevantage Corporation (NASDAQ:LFVN), Prestige Brands Holdings, Inc. (NYSE:PBH), and USANA Health Sciences, Inc. (NYSE:USNA). This group of stocks are the members of the drug related products industry and their market caps match AUXL’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Herbalife Ltd. (NYSE:HLF) | 37 | 0 | 0 |
| Nature’s Sunshine Prod. (NASDAQ:NATR) | 7 | 0 | 0 |
| Lifevantage Corporation (NASDAQ:LFVN) | 0 | 0 | |
| Prestige Brands Holdings, Inc. (NYSE:PBH) | 23 | 0 | 0 |
| USANA Health Sciences, Inc. (NYSE:USNA) | 13 | 0 | 0 |
Using the returns demonstrated by our strategies, regular investors should always track hedge fund and insider trading sentiment, and Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL) is an important part of this process.
