Here is What Hedge Funds Think About Insmed Incorporated (INSM)

How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Insmed Incorporated (NASDAQ:INSM).

Insmed Incorporated (NASDAQ:INSM) was in 17 hedge funds’ portfolios at the end of September. INSM investors should pay attention to an increase in hedge fund interest in recent months. There were 16 hedge funds in our database with INSM 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 Eagle Pharmaceuticals Inc (NASDAQ:EGRX), Federal-Mogul Corporation (NASDAQ:FDML), and Seres Therapeutics Inc (NASDAQ:MCRB) to gather more data points.

In today’s marketplace there are a multitude of metrics shareholders can use to analyze publicly traded companies. Two of the most underrated metrics are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can outclass the market by a solid margin (see the details here).

With all of this in mind, we’re going to take a look at the recent action surrounding Insmed Incorporated (NASDAQ:INSM).

What have hedge funds been doing with Insmed Incorporated (NASDAQ:INSM)?

Heading into Q4, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, inching up by 6% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Palo Alto Investors, managed by William Leland Edwards, holds the number one position in Insmed Incorporated (NASDAQ:INSM). The fund reportedly holds an $88.6 million position in the stock, comprising 4.3% of its 13F portfolio. Coming in second is Samuel Isaly of OrbiMed Advisors, with a $58.4 million position; 0.6% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that hold long positions encompass Julian Baker and Felix Baker’s Baker Bros. Advisors, Ken Griffin’s Citadel Investment Group and Jeremy Green’s Redmile Group.

As aggregate interest increased, some big names were breaking ground themselves. PEAK6 Capital Management, managed by Matthew Hulsizer, created the largest call position in Insmed Incorporated (NASDAQ:INSM), worth and estimated $0.4 million at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $0.3 million investment in the stock during the quarter. The only other fund with a brand new INSM position is Chao Ku’s Nine Chapters Capital Management.

Let’s now review hedge fund activity in other stocks similar to Insmed Incorporated (NASDAQ:INSM). These stocks are Eagle Pharmaceuticals Inc (NASDAQ:EGRX), Federal-Mogul Corporation (NASDAQ:FDML), Seres Therapeutics Inc (NASDAQ:MCRB), and NuStar GP Holdings, LLC (NYSE:NSH). This group of stocks’ market values resemble INSM’s market value.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $327 million. That figure was $247 million in INSM’s case. Eagle Pharmaceuticals Inc (NASDAQ:EGRX) is the most popular stock in this table. On the other hand NuStar GP Holdings, LLC (NYSE:NSH) is the least popular one with only 9 bullish hedge fund positions. With 17 elite hedge funds among its shareholder, Insmed Incorporated (NASDAQ:INSM) is clearly the crowd’s favorite. 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.