The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Alkermes Plc (NASDAQ:ALKS) based on those filings.
Is ALKS a good stock to buy now? Alkermes Plc (NASDAQ:ALKS) has seen an increase in hedge fund interest recently. Alkermes Plc (NASDAQ:ALKS) was in 31 hedge funds’ portfolios at the end of March. The all time high for this statistic is 34. There were 30 hedge funds in our database with ALKS positions at the end of the fourth quarter. Our calculations also showed that ALKS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Alex Denner of Sarissa Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a glance at the key hedge fund action surrounding Alkermes Plc (NASDAQ:ALKS).
Do Hedge Funds Think ALKS Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards ALKS over the last 23 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
More specifically, Sarissa Capital Management was the largest shareholder of Alkermes Plc (NASDAQ:ALKS), with a stake worth $148.5 million reported as of the end of March. Trailing Sarissa Capital Management was Renaissance Technologies, which amassed a stake valued at $113.3 million. Camber Capital Management, Armistice Capital, and Baker Bros. Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Sarissa Capital Management allocated the biggest weight to Alkermes Plc (NASDAQ:ALKS), around 14.23% of its 13F portfolio. Healthcare Value Capital is also relatively very bullish on the stock, designating 4.16 percent of its 13F equity portfolio to ALKS.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, established the most outsized position in Alkermes Plc (NASDAQ:ALKS). Balyasny Asset Management had $9.9 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $7.3 million position during the quarter. The other funds with brand new ALKS positions are Joe Riccardo’s Healthcare Value Capital, Matthew Strobeck’s Birchview Capital, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Alkermes Plc (NASDAQ:ALKS) but similarly valued. These stocks are PriceSmart, Inc. (NASDAQ:PSMT), Baozun Inc (NASDAQ:BZUN), Central Garden & Pet Co (NASDAQ:CENT), Cabot Corporation (NYSE:CBT), Prospect Capital Corporation (NASDAQ:PSEC), United Community Banks Inc (NASDAQ:UCBI), and ALX Oncology Holdings Inc. (NASDAQ:ALXO). This group of stocks’ market caps resemble ALKS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PSMT | 10 | 32204 | -2 |
| BZUN | 11 | 41016 | -3 |
| CENT | 12 | 178979 | -8 |
| CBT | 23 | 111847 | 3 |
| PSEC | 7 | 11641 | -1 |
| UCBI | 11 | 33369 | 0 |
| ALXO | 11 | 718523 | -4 |
| Average | 12.1 | 161083 | -2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.1 hedge funds with bullish positions and the average amount invested in these stocks was $161 million. That figure was $596 million in ALKS’s case. Cabot Corporation (NYSE:CBT) is the most popular stock in this table. On the other hand Prospect Capital Corporation (NASDAQ:PSEC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Alkermes Plc (NASDAQ:ALKS) is more popular among hedge funds. Our overall hedge fund sentiment score for ALKS is 83.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 22.8% in 2021 through July 2nd but still managed to beat the market by 6 percentage points. Hedge funds were also right about betting on ALKS as the stock returned 35.4% since the end of March (through 7/2) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
