Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Supernus Pharmaceuticals Inc (NASDAQ:SUPN) .
Supernus Pharmaceuticals Inc (NASDAQ:SUPN) was in 20 hedge funds’ portfolios at the end of the third quarter of 2016. SUPN shareholders have witnessed an increase in enthusiasm from smart money lately. There were 18 hedge funds in our database with SUPN holdings at the end of the previous quarter. 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 Arcos Dorados Holding Inc (NYSE:ARCO), Seacor Holdings, Inc. (NYSE:CKH), and Agree Realty Corporation (NYSE:ADC) to gather more data points.
Follow Supernus Pharmaceuticals Inc. (NASDAQ:SUPN)
Follow Supernus Pharmaceuticals Inc. (NASDAQ:SUPN)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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How are hedge funds trading Supernus Pharmaceuticals Inc (NASDAQ:SUPN)?
Heading into the fourth quarter of 2016, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the previous quarter. On the other hand, there were a total of 25 hedge funds with a bullish position in SUPN at the beginning of this year. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, HealthInvest Partners AB, led by Anders Hallberg and Carl Bennet, holds the biggest position in Supernus Pharmaceuticals Inc (NASDAQ:SUPN). HealthInvest Partners AB has a $9.4 million position in the stock, comprising 7% of its 13F portfolio. Sitting at the No. 2 spot is Robert B. Gillam of McKinley Capital Management, with a $7.8 million position. Other hedge funds and institutional investors that hold long positions comprise Israel Englander’s Millennium Management, Joseph Edelman’s Perceptive Advisors and Paul Hondros’s AlphaOne Capital Partners. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, some big names have jumped into Supernus Pharmaceuticals Inc (NASDAQ:SUPN) headfirst. Balyasny Asset Management, led by Dmitry Balyasny, assembled the largest position in Supernus Pharmaceuticals Inc (NASDAQ:SUPN). Balyasny Asset Management had $2.7 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Neil Chriss’s Hutchin Hill Capital, Ken Griffin’s Citadel Investment Group, and David Costen Haley’s HBK Investments.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Supernus Pharmaceuticals Inc (NASDAQ:SUPN) but similarly valued. These stocks are Arcos Dorados Holding Inc (NYSE:ARCO), Seacor Holdings, Inc. (NYSE:CKH), Agree Realty Corporation (NYSE:ADC), and Monotype Imaging Holdings Inc. (NASDAQ:TYPE). All of these stocks’ market caps are closest to SUPN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARCO | 15 | 34054 | 6 |
| CKH | 12 | 208258 | 0 |
| ADC | 13 | 39453 | 3 |
| TYPE | 20 | 95672 | 3 |
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $94 million. That figure was $51 million in SUPN’s case. Monotype Imaging Holdings Inc. (NASDAQ:TYPE) is the most popular stock in this table. On the other hand Seacor Holdings, Inc. (NYSE:CKH) is the least popular one with only 12 bullish hedge fund positions. Supernus Pharmaceuticals Inc (NASDAQ:SUPN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TYPE might be a better candidate to consider taking a long position in.
Disclosure: None
