Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins 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.
Is Akebia Therapeutics Inc (NASDAQ:AKBA) a buy, sell, or hold? Investors who are in the know are in a bearish mood. The number of long hedge fund positions fell by 1 recently. Our calculations also showed that akba isn’t among the 30 most popular stocks among hedge funds. AKBA was in 19 hedge funds’ portfolios at the end of the first quarter of 2019. There were 20 hedge funds in our database with AKBA positions at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to analyze the fresh hedge fund action regarding Akebia Therapeutics Inc (NASDAQ:AKBA).
How are hedge funds trading Akebia Therapeutics Inc (NASDAQ:AKBA)?
At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AKBA over the last 15 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Among these funds, Baupost Group held the most valuable stake in Akebia Therapeutics Inc (NASDAQ:AKBA), which was worth $200.4 million at the end of the first quarter. On the second spot was Abrams Capital Management which amassed $46.3 million worth of shares. Moreover, Nantahala Capital Management, Perceptive Advisors, and Consonance Capital Management were also bullish on Akebia Therapeutics Inc (NASDAQ:AKBA), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Akebia Therapeutics Inc (NASDAQ:AKBA) has experienced a decline in interest from the aggregate hedge fund industry, we can see that there was a specific group of funds who sold off their entire stakes last quarter. At the top of the heap, Steve Cohen’s Point72 Asset Management cut the biggest stake of the “upper crust” of funds tracked by Insider Monkey, valued at close to $2.8 million in call options. Wilmot B. Harkey and Daniel Mack’s fund, Nantahala Capital Management, also sold off its call options, about $2.3 million worth. These moves are important to note, as total hedge fund interest fell by 1 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Akebia Therapeutics Inc (NASDAQ:AKBA). We will take a look at National Research Corporation (NASDAQ:NRC), Amphastar Pharmaceuticals Inc (NASDAQ:AMPH), National Western Life Group, Inc. (NASDAQ:NWLI), and PJT Partners Inc (NYSE:PJT). All of these stocks’ market caps are similar to AKBA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NRC | 7 | 34345 | 2 |
| AMPH | 10 | 14602 | 2 |
| NWLI | 9 | 15680 | 0 |
| PJT | 19 | 160622 | 1 |
| Average | 11.25 | 56312 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $336 million in AKBA’s case. PJT Partners Inc (NYSE:PJT) is the most popular stock in this table. On the other hand National Research Corporation (NASDAQ:NRC) is the least popular one with only 7 bullish hedge fund positions. Akebia Therapeutics Inc (NASDAQ:AKBA) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately AKBA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AKBA were disappointed as the stock returned -41.1% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
