The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 752 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article we look at what those investors think of Ardelyx Inc (NASDAQ:ARDX).
Is Ardelyx Inc (NASDAQ:ARDX) ready to rally soon? Investors who are in the know are becoming more confident. The number of long hedge fund bets inched up by 2 in recent months. Our calculations also showed that ARDX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). ARDX was in 14 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with ARDX positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Phill Gross of Adage Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to go over the recent hedge fund action encompassing Ardelyx Inc (NASDAQ:ARDX).
What does smart money think about Ardelyx Inc (NASDAQ:ARDX)?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in ARDX over the last 17 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
More specifically, Adage Capital Management was the largest shareholder of Ardelyx Inc (NASDAQ:ARDX), with a stake worth $18.8 million reported as of the end of September. Trailing Adage Capital Management was Deerfield Management, which amassed a stake valued at $16 million. Rock Springs Capital Management, Renaissance Technologies, and 683 Capital Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position 683 Capital Partners allocated the biggest weight to Ardelyx Inc (NASDAQ:ARDX), around 1.07% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, dishing out 1.03 percent of its 13F equity portfolio to ARDX.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Pura Vida Investments, managed by Efrem Kamen, assembled the most valuable position in Ardelyx Inc (NASDAQ:ARDX). Pura Vida Investments had $0.7 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.1 million investment in the stock during the quarter. The only other fund with a new position in the stock is Ken Griffin’s Citadel Investment Group.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Ardelyx Inc (NASDAQ:ARDX) but similarly valued. We will take a look at Pacific Drilling SA (NYSE:PACD), Grupo Supervielle S.A. (NYSE:SUPV), South Plains Financial, Inc. (NASDAQ:SPFI), and Nesco Holdings, Inc. (NYSE:NSCO). This group of stocks’ market valuations match ARDX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PACD | 9 | 211654 | 0 |
| SUPV | 5 | 12377 | -2 |
| SPFI | 7 | 10846 | -1 |
| NSCO | 11 | 22374 | -7 |
| Average | 8 | 64313 | -2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $81 million in ARDX’s case. Nesco Holdings, Inc. (NYSE:NSCO) is the most popular stock in this table. On the other hand Grupo Supervielle S.A. (NYSE:SUPV) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Ardelyx Inc (NASDAQ:ARDX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on ARDX as the stock returned 58.1% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
