Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) has experienced an increase in activity from the world’s largest hedge funds recently. Our calculations also showed that AMPH isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We’re going to take a peek at the new hedge fund action surrounding Amphastar Pharmaceuticals Inc (NASDAQ:AMPH).
Hedge fund activity in Amphastar Pharmaceuticals Inc (NASDAQ:AMPH)
At Q4’s end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 60% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards AMPH over the last 14 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.
More specifically, Renaissance Technologies was the largest shareholder of Amphastar Pharmaceuticals Inc (NASDAQ:AMPH), with a stake worth $6.2 million reported as of the end of December. Trailing Renaissance Technologies was Millennium Management, which amassed a stake valued at $2.8 million. Driehaus Capital, Citadel Investment Group, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Driehaus Capital, managed by Richard Driehaus, assembled the biggest position in Amphastar Pharmaceuticals Inc (NASDAQ:AMPH). Driehaus Capital had $1.1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.6 million position during the quarter. The following funds were also among the new AMPH investors: John Overdeck and David Siegel’s Two Sigma Advisors and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) but similarly valued. We will take a look at Garrett Motion Inc. (NYSE:GTX), GasLog Partners LP (NYSE:GLOP), Materion Corp (NYSE:MTRN), and Carbon Black, Inc. (NASDAQ:CBLK). This group of stocks’ market values resemble AMPH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GTX | 13 | 213936 | 8 |
| GLOP | 7 | 24080 | 2 |
| MTRN | 17 | 81722 | 4 |
| CBLK | 17 | 46776 | 8 |
| Average | 13.5 | 91629 | 5.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $92 million. That figure was $12 million in AMPH’s case. Materion Corp (NYSE:MTRN) is the most popular stock in this table. On the other hand GasLog Partners LP (NYSE:GLOP) is the least popular one with only 7 bullish hedge fund positions. Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately AMPH wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); AMPH investors were disappointed as the stock returned 2.8% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
