Hedge Funds Are Buying Akorn, Inc. (AKRX)

Hedge funds and other investment firms that we track, manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.

Is Akorn, Inc. (NASDAQ:AKRX) a safe stock to buy now? Investors who are in the know are getting more optimistic. The number of long hedge fund bets inched up by 3 lately. At the end of this article we will also compare AKRX to other stocks, including Cepheid (NASDAQ:CPHD), IDACORP Inc (NYSE:IDA), and Apple Hospitality REIT Inc (NYSE:APLE) to get a better sense of its popularity.

At the moment there are a large number of methods shareholders have at their disposal to value their stock investments. Some of the most underrated methods are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the best investment managers can outpace the broader indices by a significant amount (see the details here).

Now, we’re going to take a glance at the fresh action surrounding Akorn, Inc. (NASDAQ:AKRX).

How are hedge funds trading Akorn, Inc. (NASDAQ:AKRX)?

At the end of the third quarter, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Scott Ferguson’s Sachem Head Capital has the number one position in Akorn, Inc. (NASDAQ:AKRX), worth close to $94.1 million, comprising 4.2% of its total 13F portfolio. Coming in second is Healthcor Management LP, led by Arthur B Cohen and Joseph Healey, holding a $66.3 million position; the fund has 3.7% of its 13F portfolio invested in the stock. Other peers that are bullish contain Mitchell Blutt’s Consonance Capital Management, Israel Englander’s Millennium Management and David Simon’s Twin Capital Management.

As industrywide interest jumped, key money managers were breaking ground themselves. Sachem Head Capital, assembled the most valuable position in Akorn, Inc. (NASDAQ:AKRX). Bart Baum’s Ionic Capital Management also made a $12.5 million investment in the stock during the quarter. The other funds with brand new AKRX positions are Matthew Mark’s Jet Capital Investors, Jim Simons’ Renaissance Technologies, and Peter Muller’s PDT Partners.

Let’s also examine hedge fund activity in other stocks similar to Akorn, Inc. (NASDAQ:AKRX). We will take a look at Cepheid (NASDAQ:CPHD), IDACORP Inc (NYSE:IDA), Apple Hospitality REIT Inc (NYSE:APLE), and Post Holdings Inc (NYSE:POST). All of these stocks’ market caps match AKRX’s market cap.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $491 million, close to the $439 million in AKRX’s case. Post Holdings Inc (NYSE:POST) is the most popular stock in this table with a total of 41 funds reporting long positions. On the other hand Apple Hospitality REIT Inc (NYSE:APLE) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Akorn, Inc. (NASDAQ:AKRX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.