Here is What Hedge Funds Think About ACADIA Pharmaceuticals Inc. (ACAD)

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 ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD).

Is ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) a buy, sell, or hold? Prominent investors are taking a bullish view. The number of long hedge fund positions rose by 3 lately. ACAD was in 28 hedge funds’ portfolios at the end of the third quarter of 2016. There were 25 hedge funds in our database with ACAD positions 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 Bruker Corporation (NASDAQ:BRKR), Brocade Communications Systems, Inc. (NASDAQ:BRCD), and Healthcare Realty Trust Inc (NYSE:HR) to gather more data points.

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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Now, let’s take a glance at the latest action regarding ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD).

How have hedgies been trading ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD)?

At Q3’s end, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Baker Bros. Advisors, managed by Julian Baker and Felix Baker, holds the largest position in ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD). Baker Bros. Advisors has a $821.3 million position in the stock, comprising 7.5% of its 13F portfolio. On Baker Bros. Advisors’ heels is Point72 Asset Management, led by Steve Cohen, holding a $65.9 million position; 0.5% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish encompass William Leland Edwards’ Palo Alto Investors, Doug Silverman and Alexander Klabin’s Senator Investment Group and Behzad Aghazadeh’s venBio Select Advisor.

As industrywide interest jumped, some big names have been driving this bullishness. Ghost Tree Capital, managed by Ken Greenberg and David Kim, created the biggest position in ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD). Ghost Tree Capital had $6.4 million invested in the company at the end of the quarter. Barry Rosenstein’s JANA Partners also made a $4.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Efrem Kamen’s Pura Vida Investments, Steve Cohen’s Point72 Asset Management, and Ken Griffin’s Citadel Investment Group.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) but similarly valued. We will take a look at Bruker Corporation (NASDAQ:BRKR), Brocade Communications Systems, Inc. (NASDAQ:BRCD), Healthcare Realty Trust Inc (NYSE:HR), and Cognex Corporation (NASDAQ:CGNX). This group of stocks’ market valuations match ACAD’s market valuation.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $255 million. That figure was $1.04 billion in ACAD’s case. Brocade Communications Systems, Inc. (NASDAQ:BRCD) is the most popular stock in this table. On the other hand Healthcare Realty Trust Inc (NYSE:HR) is the least popular one with only 6 bullish hedge fund positions. ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) 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 BRCD might be a better candidate to consider a long position.