How do we determine whether Esperion Therapeutics, Inc. (NASDAQ:ESPR) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Is Esperion Therapeutics, Inc. (NASDAQ:ESPR) undervalued? Investors who are in the know are reducing their bets on the stock. The number of long hedge fund positions shrunk by 5 lately. Our calculations also showed that ESPR isn’t among the 30 most popular stocks among hedge funds. ESPR was in 11 hedge funds’ portfolios at the end of December. There were 16 hedge funds in our database with ESPR holdings at the end of the previous quarter.
To most market participants, hedge funds are perceived as unimportant, outdated financial vehicles of yesteryear. While there are more than 8000 funds with their doors open today, Our researchers hone in on the masters of this group, about 750 funds. Most estimates calculate that this group of people control most of all hedge funds’ total capital, and by keeping track of their unrivaled investments, Insider Monkey has deciphered a number of investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship hedge fund strategy outpaced the S&P 500 index by nearly 5 percentage points annually since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
We’re going to check out the recent hedge fund action surrounding Esperion Therapeutics, Inc. (NASDAQ:ESPR).
How have hedgies been trading Esperion Therapeutics, Inc. (NASDAQ:ESPR)?
Heading into the first quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -31% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ESPR over the last 14 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Pentwater Capital Management was the largest shareholder of Esperion Therapeutics, Inc. (NASDAQ:ESPR), with a stake worth $114.4 million reported as of the end of December. Trailing Pentwater Capital Management was Partner Fund Management, which amassed a stake valued at $86.4 million. GLG Partners, Sabby Capital, and Balyasny Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
Since Esperion Therapeutics, Inc. (NASDAQ:ESPR) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of funds who sold off their positions entirely last quarter. At the top of the heap, Steve Cohen’s Point72 Asset Management said goodbye to the largest stake of the 700 funds watched by Insider Monkey, worth an estimated $22.5 million in stock. Jerome Pfund and Michael Sjostrom’s fund, Sectoral Asset Management, also dropped its stock, about $4.3 million worth. These moves are interesting, as total hedge fund interest dropped by 5 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Esperion Therapeutics, Inc. (NASDAQ:ESPR). We will take a look at Cannae Holdings, Inc. (NYSE:CNNE), TPG RE Finance Trust, Inc. (NYSE:TRTX), Berkshire Hills Bancorp, Inc. (NYSE:BHLB), and Casella Waste Systems Inc. (NASDAQ:CWST). This group of stocks’ market values are closest to ESPR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CNNE | 23 | 179733 | 0 |
| TRTX | 9 | 27112 | -1 |
| BHLB | 11 | 32334 | 3 |
| CWST | 18 | 149744 | 2 |
| Average | 15.25 | 97231 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $97 million. That figure was $226 million in ESPR’s case. Cannae Holdings, Inc. (NYSE:CNNE) is the most popular stock in this table. On the other hand TPG RE Finance Trust, Inc. (NYSE:TRTX) is the least popular one with only 9 bullish hedge fund positions. Esperion Therapeutics, Inc. (NASDAQ:ESPR) 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 ESPR wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); ESPR investors were disappointed as the stock returned -9.3% 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.
