Intra-Cellular Therapies Inc (ITCI): Hedge Fund Sentiment Takes A Turn for the Worse

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Intra-Cellular Therapies Inc (NASDAQ:ITCI).

Intra-Cellular Therapies Inc (NASDAQ:ITCI) investors should pay attention to a decrease in hedge fund sentiment lately. ITCI was in 19 hedge funds’ portfolios at the end of the third quarter of 2016. There were 25 hedge funds in our database with ITCI holdings at the end of the previous quarter. 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 California Water Service Group (NYSE:CWT), Time Inc (NYSE:TIME), and Ambarella Inc (NASDAQ:AMBA) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

David Smart/Shutterstock.com

How have hedgies been trading Intra-Cellular Therapies Inc (NASDAQ:ITCI)?

Heading into the fourth quarter of 2016, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a 24% drop from the second quarter of 2016. The sudden downwards jolt comes after several quarters of largely flat sentiment. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Lei Zhang’s Hillhouse Capital Management has the most valuable position in Intra-Cellular Therapies Inc (NASDAQ:ITCI), worth close to $15.2 million. The second most bullish fund manager is Sarissa Capital Management, managed by Alex Denner, which holds a $10.3 million position; the fund has 2.4% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism contain Julian Baker and Felix Baker’s Baker Bros. Advisors, Phill Gross and Robert Atchinson’s Adage Capital Management and Principal Global Investors’ Columbus Circle Investors.