Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small-cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Pain Therapeutics, Inc. (NASDAQ:PTIE) from the perspective of those elite funds.
Is Pain Therapeutics, Inc. (NASDAQ:PTIE) a healthy stock for your portfolio? Hedge funds are getting less bullish. The number of bullish hedge fund bets was cut by 4 lately. At the end of this article, we will also compare PTIE to other stocks, including OHR Pharmaceutical Inc (NASDAQ:OHRP), Demand Media Inc (NYSE:DMD), and Galmed Pharmaceuticals Ltd (NASDAQ:GLMD) to get a better sense of its popularity.
Follow Cassava Sciences Inc (NASDAQ:SAVA)
Follow Cassava Sciences Inc (NASDAQ:SAVA)
To the average investor, there are numerous metrics market participants put to use to appraise publicly traded companies. A duo of the most under-the-radar metrics is composed of hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the best investment managers can beat the broader indices by a very impressive margin (see the details here).
With all of this in mind, let’s take a look at the new action surrounding Pain Therapeutics, Inc. (NASDAQ:PTIE).
Hedge fund activity in Pain Therapeutics, Inc. (NASDAQ:PTIE)
At the end of September, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a decrease of 31% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exist a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management has the biggest position in Pain Therapeutics, Inc. (NASDAQ:PTIE), worth close to $8.3 million, amounting to 1.1% of its total 13F portfolio. On Nantahala Capital Management’s heels is Biotechnology Value Fund / BVF Inc, managed by Mark Lampert, which holds an $1.7 million position; 0.3% of its 13F portfolio is allocated to the stock. Other members of the smart money with similar optimism encompass Renaissance Technologies, Ari Zweiman’s 683 Capital Partners and D E Shaw.
Judging by the fact that Pain Therapeutics, Inc. (NASDAQ:PTIE) has faced a declining sentiment from the aggregate hedge fund industry, we can see that there were a few funds that decided to sell off their full holdings in the third quarter. It’s worth mentioning that Louis Bacon’s Moore Global Investments dumped the largest investment of the “upper crust” of funds watched by Insider Monkey, comprising close to $0.1 million in stock. Ben Levine, Andrew Manuel and Stefan Renold’s fund, LMR Partners, also dropped its stock, about $0.1 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 4 funds in the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Pain Therapeutics, Inc. (NASDAQ:PTIE) but similarly valued. These stocks are OHR Pharmaceutical Inc (NASDAQ:OHRP), Demand Media Inc (NYSE:DMD), Galmed Pharmaceuticals Ltd (NASDAQ:GLMD), and Caladrius Biosciences Inc (NASDAQ:CLBS). This group of stocks’ market valuations is closest to Pain Therapeutics, Inc. (NASDAQ:PTIE)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OHRP | 6 | 1983 | -4 |
| DMD | 10 | 16880 | -2 |
| GLMD | 6 | 4855 | -1 |
| CLBS | 5 | 5111 | -5 |
As you can see, these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $23 million in Pain Therapeutics, Inc. (NASDAQ:PTIE)’s case. Demand Media Inc (NYSE:DMD) is the most popular stock in this table. On the other hand, Caladrius Biosciences Inc (NASDAQ:CLBS) is the least popular one with only 5 bullish hedge fund positions. Even though Pain Therapeutics, Inc. (NASDAQ:PTIE) is not the most popular stock in this group, we can’t ignore hedge fund interest, which is still above average. However, we think that it’s better to invest in stocks that hedge funds are collectively more bullish on, such as Demand Media Inc (NYSE:DMD), in this particular group.
