How Akorn, Inc. (AKRX) Stacks Up Against Its Peers

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Is Akorn, Inc. (NASDAQ:AKRX) going to take off soon? The best stock pickers are selling. The number of long hedge fund bets dropped by 6 in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Thor Industries, Inc. (NYSE:THO), Paramount Group Inc (NYSE:PGRE), and Western Alliance Bancorporation (NYSE:WAL) to gather more data points.

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What have hedge funds been doing with Akorn, Inc. (NASDAQ:AKRX)?

At Q3’s end, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, an 18% decline from the second quarter of 2016 after a short-lived rebound in hedge fund ownership during Q2. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Paulson & Co, managed by John Paulson, holds the number one position in Akorn, Inc. (NASDAQ:AKRX). Paulson & Co has a $244.6 million position in the stock, comprising 2.7% of its 13F portfolio. Sitting at the No. 2 spot is Consonance Capital Management, led by Mitchell Blutt, holding a $60 million position; the fund has 5.8% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish contain David Simon’s Twin Capital Management, Philip Hempleman’s Ardsley Partners and Solomon Kumin’s Folger Hill Asset Management.

Seeing as Akorn, Inc. (NASDAQ:AKRX) has experienced falling interest from hedge fund managers, we can see that there was a specific group of fund managers who sold off their entire stakes last quarter. Interestingly, Scott Ferguson’s Sachem Head Capital cut the largest stake of all the hedgies monitored by Insider Monkey, valued at an estimated $70.1 million in stock, and Arthur B Cohen and Joseph Healey’s Healthcor Management LP was right behind this move, as the fund dropped about $59.8 million worth of shares. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 6 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to Akorn, Inc. (NASDAQ:AKRX). We will take a look at Thor Industries, Inc. (NYSE:THO), Paramount Group Inc (NYSE:PGRE), Western Alliance Bancorporation (NYSE:WAL), and RPC, Inc. (NYSE:RES). This group of stocks’ market values match AKRX’s market value.

As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $282 million. That figure was $501 million in AKRX’s case. Western Alliance Bancorporation (NYSE:WAL) is the most popular stock in this table. On the other hand Paramount Group Inc (NYSE:PGRE) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Akorn, Inc. (NASDAQ:AKRX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None