Hedge Funds Are Dumping Ariad Pharmaceuticals, Inc. (ARIA)

Is Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) an attractive investment right now? Hedge funds are reducing their bets on the stock. The number of long hedge fund positions went down by 2 recently. Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) was in 29 hedge funds’ portfolios at the end of September. There were 31 hedge funds in our database with Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) 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 Beneficial Bancorp Inc (NASDAQ:BNCL), The Fresh Market Inc (NASDAQ:TFM), and BJ’s Restaurants, Inc. (NASDAQ:BJRI) to gather more data points.

In the financial world, there are tons of metrics stock market investors employ to size up their holdings. Some of the less utilized metrics are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can outperform the market by a solid margin (see the details here).

With all of this in mind, let’s take a glance at the recent action encompassing Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA).

What does the smart money think about Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA)?

At the end of September, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 6% from one quarter earlier. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Sarissa Capital Management, managed by Alex Denner, holds the most valuable position in Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA). Sarissa Capital Management has a $75 million position in the stock, comprising 18.5% of its 13F portfolio. Coming in second is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which holds a $40.9 million position; 0.1% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions encompass Stephen DuBois’ Camber Capital Management, Zach Schreiber’s Point State Capital, and William Leland Edwards’s Palo Alto Investors.

Judging by the fact that Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) has faced a declination in interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of hedgies that decided to sell off their entire stakes by the end of the third quarter. Interestingly, Rob Citrone’s Discovery Capital Management said goodbye to the largest position of the 700 funds monitored by Insider Monkey, totaling an estimated $43.9 million in stock. Clifford Fox’s fund, Columbus Circle Investors, also sold off its stock, about $5.7 million worth of shares. These bearish behaviors are important to note, as total hedge fund interest fell by 2 funds by the end of the third quarter.

Let’s now review hedge fund activity in other stocks similar to Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA). We will take a look at Beneficial Bancorp Inc (NASDAQ:BNCL), The Fresh Market Inc (NASDAQ:TFM), BJ’s Restaurants, Inc. (NASDAQ:BJRI), and Sturm, Ruger & Company (NYSE:RGR). All of these stocks’ market caps are closest to Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA)’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 $134 million. That figure was $233 million in Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA)’s case. Beneficial Bancorp Inc (NASDAQ:BNCL) is the most popular stock in this table. On the other hand, Sturm, Ruger & Company (NYSE:RGR) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) 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.