The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Akebia Therapeutics Inc (NASDAQ:AKBA) from the perspective of those successful funds.
Is Akebia Therapeutics Inc (NASDAQ:AKBA) worth your attention right now? The smart money is surely actually taking a pessimistic view. The number of long hedge fund positions experienced a decline of 1 lately. There were 13 hedge funds in our database with AKBA 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 RadNet Inc. (NASDAQ:RDNT), Corvus Pharmaceuticals Inc (NASDAQ:CRVS), and Natural Resource Partners LP (NYSE:NRP) 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.
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Now, we’re going to check out the key action surrounding Akebia Therapeutics Inc (NASDAQ:AKBA).
How have hedgies been trading Akebia Therapeutics Inc (NASDAQ:AKBA)?
Heading into the fourth quarter of 2016, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the second quarter of 2016. By comparison, 10 hedge funds held shares or bullish call options in AKBA heading into this year. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management has the most valuable position in Akebia Therapeutics Inc (NASDAQ:AKBA), worth close to $17.3 million, accounting for 2.1% of its total 13F portfolio. The second most bullish fund manager is Behzad Aghazadeh of venBio Select Advisor, with a $8.5 million position; 1.5% of its 13F portfolio is allocated to the company. Other peers that are bullish consist of Joseph Edelman’s Perceptive Advisors, Paul Marshall and Ian Wace’s Marshall Wace LLP and Ken Greenberg and David Kim’s Ghost Tree Capital. We should note that Nantahala Capital Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Judging by the fact that Akebia Therapeutics Inc (NASDAQ:AKBA) has faced falling interest from the smart money, we can see that there exists a select few hedgies who were dropping their entire stakes heading into Q4. Intriguingly, Peter A. Wright’s PAW Capital Partners sold off the largest position of all the hedgies watched by Insider Monkey, valued at about $0.3 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund said goodbye to about $0.2 million worth of shares.
Let’s also examine hedge fund activity in other stocks similar to Akebia Therapeutics Inc (NASDAQ:AKBA). These stocks are RadNet Inc. (NASDAQ:RDNT), Corvus Pharmaceuticals Inc (NASDAQ:CRVS), Natural Resource Partners LP (NYSE:NRP), and Arlington Asset Investment Corp (NYSE:AI). This group of stocks’ market valuations resemble AKBA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RDNT | 8 | 38660 | -1 |
| CRVS | 5 | 105640 | 0 |
| NRP | 5 | 6188 | 5 |
| AI | 6 | 12969 | 1 |
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $45 million in AKBA’s case. RadNet Inc. (NASDAQ:RDNT) is the most popular stock in this table. On the other hand Corvus Pharmaceuticals Inc (NASDAQ:CRVS) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Akebia Therapeutics Inc (NASDAQ:AKBA) 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
