Is ArQule, Inc. (ARQL) Going to Burn These Hedge Funds?: ShangPharma Corp (ADR) (SHP), OncoGenex Pharmaceuticals Inc (OGXI)

ArQule, Inc. (NASDAQ:ARQL) was in 13 hedge funds’ portfolio at the end of December. ARQL investors should pay attention to a decrease in hedge fund sentiment in recent months. There were 17 hedge funds in our database with ARQL positions at the end of the previous quarter.

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Equally as important, optimistic insider trading sentiment is a second way to parse down the investments you’re interested in. Just as you’d expect, there are many motivations for an upper level exec to cut shares of his or her company, but just one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the useful potential of this strategy if investors know what to do (learn more here).

With these “truths” under our belt, we’re going to take a gander at the latest action regarding ArQule, Inc. (NASDAQ:ARQL).

What have hedge funds been doing with ArQule, Inc. (NASDAQ:ARQL)?

In preparation for this year, a total of 13 of the hedge funds we track were long in this stock, a change of -24% from the previous quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes significantly.

According to our comprehensive database, Jean-Marie Eveillard’s First Eagle Investment Management had the most valuable position in ArQule, Inc. (NASDAQ:ARQL), worth close to $13 million, comprising 0% of its total 13F portfolio. On First Eagle Investment Management’s heels is Julian Baker and Felix Baker of Baker Bros. Advisors, with a $4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include James E. Flynn’s Deerfield Management, Peter Kolchinsky’s RA Capital Management and D. E. Shaw’s D E Shaw.

Due to the fact that ArQule, Inc. (NASDAQ:ARQL) has witnessed declining sentiment from the smart money, logic holds that there was a specific group of hedgies that slashed their full holdings last quarter. At the top of the heap, James E. Flynn’s Deerfield Management sold off the largest position of all the hedgies we key on, comprising about $6 million in stock.. Arthur B Cohen and Joseph Healey’s fund, Healthcor Management LP, also cut its stock, about $6 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 4 funds last quarter.

How have insiders been trading ArQule, Inc. (NASDAQ:ARQL)?

Insider purchases made by high-level executives is best served when the primary stock in question has experienced transactions within the past half-year. Over the latest six-month time frame, ArQule, Inc. (NASDAQ:ARQL) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to ArQule, Inc. (NASDAQ:ARQL). These stocks are ShangPharma Corp (ADR) (NYSE:SHP), OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI), Enzon Pharmaceuticals, Inc. (NASDAQ:ENZN), Durata Therapeutics Inc (NASDAQ:DRTX), and Cytokinetics, Inc. (NASDAQ:CYTK). This group of stocks belong to the biotechnology industry and their market caps match ARQL’s market cap.

With the returns exhibited by our tactics, everyday investors should always watch hedge fund and insider trading activity, and ArQule, Inc. (NASDAQ:ARQL) applies perfectly to this mantra.

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