“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Assertio Therapeutics, Inc. (NASDAQ:ASRT).
Assertio Therapeutics, Inc. (NASDAQ:ASRT) was in 14 hedge funds’ portfolios at the end of March. ASRT has experienced a decrease in hedge fund interest of late. There were 16 hedge funds in our database with ASRT positions at the end of the previous quarter. Our calculations also showed that asrt 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’ 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 market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to go over the new hedge fund action surrounding Assertio Therapeutics, Inc. (NASDAQ:ASRT).
How have hedgies been trading Assertio Therapeutics, Inc. (NASDAQ:ASRT)?
Heading into the second quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the fourth quarter of 2018. By comparison, 14 hedge funds held shares or bullish call options in ASRT a year ago. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Assertio Therapeutics, Inc. (NASDAQ:ASRT), with a stake worth $26.3 million reported as of the end of March. Trailing Renaissance Technologies was Rima Senvest Management, which amassed a stake valued at $5.1 million. D E Shaw, Marshall Wace LLP, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Assertio Therapeutics, Inc. (NASDAQ:ASRT) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there is a sect of funds that slashed their full holdings by the end of the third quarter. Interestingly, Steven Boyd’s Armistice Capital dropped the biggest stake of the “upper crust” of funds watched by Insider Monkey, totaling close to $11.8 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund said goodbye to about $0.4 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Assertio Therapeutics, Inc. (NASDAQ:ASRT). These stocks are Rimini Street, Inc. (NASDAQ:RMNI), Solid Biosciences Inc. (NASDAQ:SLDB), Rockwell Medical Inc (NASDAQ:RMTI), and Trilogy Metals Inc. (NYSE:TMQ). This group of stocks’ market values are similar to ASRT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RMNI | 4 | 6124 | 1 |
| SLDB | 10 | 73429 | -1 |
| RMTI | 3 | 2056 | 1 |
| TMQ | 13 | 120065 | 1 |
| Average | 7.5 | 50419 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $46 million in ASRT’s case. Trilogy Metals Inc. (NYSE:TMQ) is the most popular stock in this table. On the other hand Rockwell Medical Inc (NASDAQ:RMTI) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Assertio Therapeutics, Inc. (NASDAQ:ASRT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately ASRT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ASRT were disappointed as the stock returned -37.5% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.