Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Paratek Pharmaceuticals Inc (NASDAQ:PRTK) shareholders have witnessed a decrease in enthusiasm from smart money in recent months. 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 SunOpta, Inc. (USA) (NASDAQ:STKL), GenMark Diagnostics, Inc (NASDAQ:GNMK), and NewBridge Bancorp (NASDAQ:NBBC) to gather more data points.
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Follow Paratek Pharmaceuticals Inc. (NASDAQ:PRTK)
In today’s marketplace, there are several tools that stock market investors have at their disposal to assess their holdings. A pair of the less known tools are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the best fund managers can outperform their index-focused peers by a healthy margin (see the details here).
Keeping this in mind, let’s take a look at the fresh action surrounding Paratek Pharmaceuticals Inc (NASDAQ:PRTK).
Hedge fund activity in Paratek Pharmaceuticals Inc (NASDAQ:PRTK)
At the end of Q3, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 27% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Seth Klarman’s Baupost Group has the number one position in Paratek Pharmaceuticals Inc (NASDAQ:PRTK), worth close to $29.3 million, amounting to 0.5% of its total 13F portfolio. Coming in second is Dennis Purcell of Aisling Capital, with a $13 million position; 2.3% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish consist of Kevin Kotler’s Broadfin Capital, Jeffrey Jay and David Kroin’s Great Point Partners, and Jim Roumell’s Roumell Asset Management.
Because Paratek Pharmaceuticals Inc (NASDAQ:PRTK) has faced a falling interest from the entirety of the hedge funds we track, it’s safe to say that there were a few fund managers that elected to cut their full holdings last quarter. Interestingly, Israel Englander’s Millennium Management dumped the biggest position of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $1 million in stock. Peter Muller’s fund, PDT Partners, also cut its stock, about $0.4 million worth of shares. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Paratek Pharmaceuticals Inc (NASDAQ:PRTK) but similarly valued. We will take a look at SunOpta, Inc. (USA) (NASDAQ:STKL), GenMark Diagnostics, Inc (NASDAQ:GNMK), NewBridge Bancorp (NASDAQ:NBBC), and Neos Therapeutics Inc (NASDAQ:NEOS). This group of stocks’ market caps matches Paratek Pharmaceuticals Inc (NASDAQ:PRTK)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STKL | 20 | 138860 | 5 |
| GNMK | 12 | 58331 | -1 |
| NBBC | 10 | 65003 | 4 |
| NEOS | 9 | 53284 | 9 |
As you can see, these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $79 million. That figure was $72 million in Paratek Pharmaceuticals Inc (NASDAQ:PRTK)’s case. SunOpta, Inc. (USA) (NASDAQ:STKL) is the most popular stock in this table. On the other hand, Neos Therapeutics Inc (NASDAQ:NEOS) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks, Paratek Pharmaceuticals Inc (NASDAQ:PRTK) is even less popular than Neos Therapeutics Inc (NASDAQ:NEOS). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.