The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Collegium Pharmaceutical Inc (NASDAQ:COLL).
Collegium Pharmaceutical Inc (NASDAQ:COLL) registered a decrease in hedge fund interest among investors in our database last quarter. There were 10 hedge funds in our database with COLL holdings at the end of September. 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 21Vianet Group Inc (NASDAQ:VNET), Del Taco Restaurants Inc (NASDAQ:TACO), and KEYW Holding Corp. (NASDAQ:KEYW) to gather more data points.
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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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Now, we’re going to review the latest action encompassing Collegium Pharmaceutical Inc (NASDAQ:COLL).
How are hedge funds trading Collegium Pharmaceutical Inc (NASDAQ:COLL)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on Collegium Pharmaceutical, down by two funds from the end of June. The graph below displays the number of hedge funds with bullish position in COLL over the last five quarters. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Alan Frazier’s Frazier Healthcare Partners has the most valuable position in Collegium Pharmaceutical Inc (NASDAQ:COLL), worth close to $36.4 million, corresponding to 17.8% of its total 13F portfolio. Coming in second is Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management, with a $29.8 million position; the fund has 1.9% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Arthur B Cohen and Joseph Healey’s Healthcor Management LP, Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management and Eric Bannasch’s Cadian Capital. We should note that none of these hedge funds are 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.
Because Collegium Pharmaceutical Inc (NASDAQ:COLL) has faced falling interest from the smart money, logic holds that there lies a certain “tier” of money managers that slashed their positions entirely in the third quarter. At the top of the heap, Oleg Nodelman’s EcoR1 Capital cashed in the largest investment of all the hedgies tracked by Insider Monkey, comprising close to $3.3 million in stock, and Hal Mintz’s Sabby Capital was right behind this move, as the fund said goodbye to about $1.2 million worth of shares.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Collegium Pharmaceutical Inc (NASDAQ:COLL) but similarly valued. These stocks are 21Vianet Group Inc (NASDAQ:VNET), Del Taco Restaurants Inc (NASDAQ:TACO), KEYW Holding Corp. (NASDAQ:KEYW), and Intersect ENT Inc (NASDAQ:XENT). This group of stocks’ market caps resemble COLL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VNET | 9 | 5413 | -2 |
| TACO | 15 | 79942 | 1 |
| KEYW | 9 | 12250 | 4 |
| XENT | 13 | 67784 | 3 |
As you can see these stocks had an average of 12 funds with bullish positions and the average amount invested in these stocks was $41 million, which is lower than the $140 million in COLL’s case. Del Taco Restaurants Inc (NASDAQ:TACO) is the most popular stock in this table. On the other hand 21Vianet Group Inc (NASDAQ:VNET) is the least popular one with only 9 bullish hedge fund positions. Collegium Pharmaceutical Inc (NASDAQ:COLL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Del Taco Restaurants Inc (NASDAQ:TACO) might be a better candidate to consider taking a long position in.
Disclosure: none
