Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Paratek Pharmaceuticals Inc (NASDAQ:PRTK).
Paratek Pharmaceuticals Inc (NASDAQ:PRTK) shareholders have witnessed a decrease in hedge fund sentiment recently. PRTK was in 16 hedge funds’ portfolios at the end of September. There were 17 hedge funds in our database with PRTK positions at the end of the previous quarter. Our calculations also showed that PRTK isn’t among the 30 most popular stocks among hedge funds.
In the eyes of most stock holders, hedge funds are seen as underperforming, old financial vehicles of yesteryear. While there are more than 8,000 funds in operation at present, Our experts look at the crème de la crème of this club, about 700 funds. Most estimates calculate that this group of people manage bulk of the hedge fund industry’s total asset base, and by monitoring their inimitable picks, Insider Monkey has uncovered several investment strategies that have historically outstripped the market. Insider Monkey’s flagship hedge fund strategy defeated the S&P 500 index by 6 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
We’re going to review the new hedge fund action surrounding Paratek Pharmaceuticals Inc (NASDAQ:PRTK).
What does the smart money think about Paratek Pharmaceuticals Inc (NASDAQ:PRTK)?
Heading into the fourth quarter of 2018, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PRTK over the last 13 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Highland Capital Management held the most valuable stake in Paratek Pharmaceuticals Inc (NASDAQ:PRTK), which was worth $25.7 million at the end of the third quarter. On the second spot was Baupost Group which amassed $23.2 million worth of shares. Moreover, Armistice Capital, Arbiter Partners Capital Management, and Rock Springs Capital Management were also bullish on Paratek Pharmaceuticals Inc (NASDAQ:PRTK), allocating a large percentage of their portfolios to this stock.
Since Paratek Pharmaceuticals Inc (NASDAQ:PRTK) has experienced falling interest from the smart money, we can see that there lies a certain “tier” of money managers that slashed their full holdings by the end of the third quarter. Interestingly, Anand Parekh’s Alyeska Investment Group dumped the biggest investment of the “upper crust” of funds watched by Insider Monkey, worth close to $4.9 million in stock. Lawrence Hawkins’s fund, Prosight Capital, also cut its stock, about $1.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Paratek Pharmaceuticals Inc (NASDAQ:PRTK) but similarly valued. These stocks are Sienna Biopharmaceuticals, Inc. (NASDAQ:SNNA), Silicom Ltd. (NASDAQ:SILC), Unum Therapeutics Inc. (NASDAQ:UMRX), and YRC Worldwide, Inc. (NASDAQ:YRCW). This group of stocks’ market caps resemble PRTK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SNNA | 5 | 32141 | -1 |
| SILC | 7 | 9463 | 2 |
| UMRX | 7 | 19884 | 3 |
| YRCW | 10 | 15978 | -6 |
| Average | 7.25 | 19 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $91 million in PRTK’s case. YRC Worldwide, Inc. (NASDAQ:YRCW) is the most popular stock in this table. On the other hand Sienna Biopharmaceuticals, Inc. (NASDAQ:SNNA) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Paratek Pharmaceuticals Inc (NASDAQ:PRTK) 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.
Disclosure: None. This article was originally published at Insider Monkey.
