Is Seattle Genetics, Inc. (NASDAQ:SGEN) a healthy stock for your portfolio? The smart money is in a pessimistic mood. The number of long hedge fund positions decreased by 1 lately.
If you’d ask most investors, hedge funds are seen as underperforming, old investment vehicles of the past. While there are more than 8000 funds with their doors open at present, we look at the masters of this club, close to 450 funds. Most estimates calculate that this group controls most of all hedge funds’ total asset base, and by paying attention to their best picks, we have revealed a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year 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 outclassed the S&P 500 index by 24 percentage points in 7 months (see the details here).
Just as important, bullish insider trading activity is another way to break down the world of equities. As the old adage goes: there are plenty of motivations for an insider to get rid of shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the impressive potential of this tactic if “monkeys” know where to look (learn more here).
Consequently, let’s take a gander at the latest action surrounding Seattle Genetics, Inc. (NASDAQ:SGEN).
How have hedgies been trading Seattle Genetics, Inc. (NASDAQ:SGEN)?
Heading into 2013, a total of 8 of the hedge funds we track were bullish in this stock, a change of -11% from the third quarter. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes considerably.
According to our comprehensive database, Julian Baker and Felix Baker’s Baker Bros. Advisors had the biggest position in Seattle Genetics, Inc. (NASDAQ:SGEN), worth close to $447.7 million, comprising 11.7% of its total 13F portfolio. Coming in second is Sectoral Asset Management, managed by Jerome Pfund and Michael Sjostrom, which held a $10.1 million position; 0.4% of its 13F portfolio is allocated to the company. Other peers that hold long positions include Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group.
Judging by the fact that Seattle Genetics, Inc. (NASDAQ:SGEN) has experienced falling interest from the smart money, it’s easy to see that there lies a certain “tier” of fund managers who sold off their positions entirely heading into 2013. At the top of the heap, Richard Driehaus’s Driehaus Capital dumped the biggest investment of the 450+ funds we track, valued at close to $3.5 million in stock.. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also dumped its stock, about $0.2 million worth. These moves are important to note, as total hedge fund interest was cut by 1 funds heading into 2013.
What do corporate executives and insiders think about Seattle Genetics, Inc. (NASDAQ:SGEN)?
Insider purchases made by high-level executives is at its handiest when the company in focus has experienced transactions within the past six months. Over the last half-year time period, Seattle Genetics, Inc. (NASDAQ:SGEN) has experienced zero unique insiders buying, and 7 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Seattle Genetics, Inc. (NASDAQ:SGEN). These stocks are Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX), Incyte Corporation (NASDAQ:INCY), Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ), Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA), and Medivation Inc (NASDAQ:MDVN). All of these stocks are in the biotechnology industry and their market caps are similar to SGEN’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) | 24 | 0 | 14 |
| Incyte Corporation (NASDAQ:INCY) | 15 | 1 | 6 |
| Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ) | 21 | 0 | 6 |
| Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) | 19 | 0 | 11 |
| Medivation Inc (NASDAQ:MDVN) | 29 | 0 | 4 |
With the returns shown by our time-tested strategies, retail investors should always watch hedge fund and insider trading sentiment, and Seattle Genetics, Inc. (NASDAQ:SGEN) is no exception.
