Reputable billionaire investors such as Jim Simons, Cliff Asness and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Is Intercept Pharmaceuticals Inc (NASDAQ:ICPT) ready to rally soon? Money managers are taking a bullish view. The number of bullish hedge fund positions went up by 3 in recent months. Our calculations also showed that ICPT isn’t among the 30 most popular stocks among hedge funds (view the video below). ICPT was in 24 hedge funds’ portfolios at the end of June. There were 21 hedge funds in our database with ICPT holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most traders, hedge funds are assumed to be slow, outdated financial tools of yesteryear. While there are over 8000 funds trading at the moment, Our experts choose to focus on the crème de la crème of this club, around 750 funds. Most estimates calculate that this group of people administer the majority of the hedge fund industry’s total capital, and by shadowing their finest equity investments, Insider Monkey has identified a number of investment strategies that have historically defeated the market. Insider Monkey’s flagship hedge fund strategy outstripped the S&P 500 index by around 5 percentage points per year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a look at the new hedge fund action regarding Intercept Pharmaceuticals Inc (NASDAQ:ICPT).
How have hedgies been trading Intercept Pharmaceuticals Inc (NASDAQ:ICPT)?
At the end of the second quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from one quarter earlier. On the other hand, there were a total of 18 hedge funds with a bullish position in ICPT a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Intercept Pharmaceuticals Inc (NASDAQ:ICPT) was held by Citadel Investment Group, which reported holding $84.3 million worth of stock at the end of March. It was followed by Rima Senvest Management with a $81.7 million position. Other investors bullish on the company included Sarissa Capital Management, Two Sigma Advisors, and Consonance Capital Management.
As industrywide interest jumped, key hedge funds have jumped into Intercept Pharmaceuticals Inc (NASDAQ:ICPT) headfirst. Consonance Capital Management, managed by Mitchell Blutt, initiated the most valuable position in Intercept Pharmaceuticals Inc (NASDAQ:ICPT). Consonance Capital Management had $30.9 million invested in the company at the end of the quarter. Robert Pohly’s Samlyn Capital also initiated a $18 million position during the quarter. The other funds with new positions in the stock are Joseph Edelman’s Perceptive Advisors, Matt Sirovich and Jeremy Mindich’s Scopia Capital, and Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management.
Let’s go over hedge fund activity in other stocks similar to Intercept Pharmaceuticals Inc (NASDAQ:ICPT). These stocks are Independent Bank Corp (NASDAQ:INDB), AMN Healthcare Services Inc (NYSE:AMN), Oi SA (NYSE:OIBR), and Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA). All of these stocks’ market caps match ICPT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| INDB | 11 | 16780 | 5 |
| AMN | 14 | 109685 | 3 |
| OIBR | 18 | 866887 | -3 |
| IBA | 3 | 39180 | 0 |
| Average | 11.5 | 258133 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $258 million. That figure was $403 million in ICPT’s case. Oi SA (NYSE:OIBR) is the most popular stock in this table. On the other hand Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Intercept Pharmaceuticals Inc (NASDAQ:ICPT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately ICPT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ICPT were disappointed as the stock returned -16.6% during the third quarter 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 many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
