The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards Amphastar Pharmaceuticals Inc (NASDAQ:AMPH), and what that likely means for the prospects of the company and its stock.
Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 12 hedge funds’ portfolios at the end of September. At the end of this article we will also compare AMPH to other stocks, including TG Therapeutics Inc (NASDAQ:TGTX), National Interstate Corporation (NASDAQ:NATL), and Green Brick Partners Inc (NASDAQ:GRBK) to get a better sense of its popularity.
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To the average investor, there are many metrics investors have at their disposal to size up their stock investments. Two of the less utilized metrics are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the elite fund managers can outclass the S&P 500 by a superb margin (see the details here).
Keeping this in mind, we’re going to analyze the latest action regarding Amphastar Pharmaceuticals Inc (NASDAQ:AMPH).
What does the smart money think about Amphastar Pharmaceuticals Inc (NASDAQ:AMPH)?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, flat from the second quarter. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Broadfin Capital, managed by Kevin Kotler, holds the largest position in Amphastar Pharmaceuticals Inc (NASDAQ:AMPH). Broadfin Capital has a $14.9 million position in the stock, comprising 0.8% of its 13F portfolio. The second largest stake is held by Fisher Asset Management, led by Ken Fisher, holding a $2.7 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that are bullish encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Jim Simons’ Renaissance Technologies and John Overdeck and David Siegel’s Two Sigma Advisors.
Moreover, there lies a certain “tier” of funds that elected to cut their entire stakes heading into Q4. It’s worth mentioning that James E. Flynn’s Deerfield Management dumped the biggest position of the “upper crust” of funds watched by Insider Monkey, worth about $7.9 million in stock. Mark Kingdon’s fund, Kingdon Capital, also sold off its stock, about $3.6 million worth.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) but similarly valued. These stocks are TG Therapeutics Inc (NASDAQ:TGTX), National Interstate Corporation (NASDAQ:NATL), Green Brick Partners Inc (NASDAQ:GRBK), and Western Asset Mortgage Capital Corp (NYSE:WMC). This group of stocks’ market caps match AMPH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TGTX | 10 | 112681 | -3 |
| NATL | 5 | 47849 | 0 |
| GRBK | 10 | 375709 | -2 |
| WMC | 4 | 1505 | -2 |
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $134 million, compared to $26 million in AMPH’s case. TG Therapeutics Inc (NASDAQ:TGTX) is the most popular stock in this table with a total of 10 funds reporting long positions. On the other hand Western Asset Mortgage Capital Corp (NYSE:WMC) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) 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.