The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and famous investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Pacira Pharmaceuticals Inc (NASDAQ:PCRX) based on those filings.
Pacira Pharmaceuticals Inc (NASDAQ:PCRX) investors should pay attention to an increase in enthusiasm from smart money of late. PCRX was in 27 hedge funds’ portfolios at the end of the first quarter of 2019. There were 25 hedge funds in our database with PCRX holdings at the end of the previous quarter. Our calculations also showed that PCRX isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s go over the new hedge fund action surrounding Pacira Pharmaceuticals Inc (NASDAQ:PCRX).
What does the smart money think about Pacira Pharmaceuticals Inc (NASDAQ:PCRX)?
At the end of the first quarter, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PCRX over the last 15 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Consonance Capital Management was the largest shareholder of Pacira Pharmaceuticals Inc (NASDAQ:PCRX), with a stake worth $139 million reported as of the end of March. Trailing Consonance Capital Management was Rock Springs Capital Management, which amassed a stake valued at $47.6 million. Millennium Management, Armistice Capital, and Renaissance Technologies were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, key money managers have been driving this bullishness. Armistice Capital, managed by Steven Boyd, created the most outsized position in Pacira Pharmaceuticals Inc (NASDAQ:PCRX). Armistice Capital had $40.8 million invested in the company at the end of the quarter. Justin John Ferayorni’s Tamarack Capital Management also made a $12.2 million investment in the stock during the quarter. The following funds were also among the new PCRX investors: John Paulson’s Paulson & Co, Benjamin A. Smith’s Laurion Capital Management, and Jeffrey Talpins’s Element Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Pacira Pharmaceuticals Inc (NASDAQ:PCRX) but similarly valued. These stocks are Warrior Met Coal, Inc. (NYSE:HCC), Federal Signal Corporation (NYSE:FSS), Redwood Trust, Inc. (NYSE:RWT), and Oceaneering International, Inc. (NYSE:OII). This group of stocks’ market caps are closest to PCRX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HCC | 35 | 479779 | 2 |
| FSS | 20 | 71386 | -2 |
| RWT | 15 | 111479 | 3 |
| OII | 21 | 127792 | 5 |
| Average | 22.75 | 197609 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $198 million. That figure was $488 million in PCRX’s case. HCC Insurance Holdings, Inc. (NYSE:HCC) is the most popular stock in this table. On the other hand Redwood Trust, Inc. (NYSE:RWT) is the least popular one with only 15 bullish hedge fund positions. Pacira Pharmaceuticals Inc (NASDAQ:PCRX) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on PCRX as the stock returned 16.8% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
