Is Hi-Tech Pharmacal Co. (HITK) Going to Burn These Hedge Funds? – Sagent Pharmaceuticals Inc (SGNT), Momenta Pharmaceuticals, Inc. (MNTA)

Hi-Tech Pharmacal Co. (NASDAQ:HITK) was in 11 hedge funds’ portfolio at the end of December. HITK investors should be aware of an increase in hedge fund interest in recent months. There were 7 hedge funds in our database with HITK holdings at the end of the previous quarter.

To the average investor, there are dozens of indicators market participants can use to analyze the equity markets. A pair of the most underrated are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite fund managers can trounce the market by a very impressive margin (see just how much).

Just as important, optimistic insider trading activity is a second way to break down the stock market universe. Just as you’d expect, there are lots of motivations for an executive to sell shares of his or her company, but only one, very simple reason why they would buy. Several academic studies have demonstrated the market-beating potential of this method if piggybackers know what to do (learn more here).

With these “truths” under our belt, it’s important to take a look at the latest action surrounding Hi-Tech Pharmacal Co. (NASDAQ:HITK).

What does the smart money think about Hi-Tech Pharmacal Co. (NASDAQ:HITK)?

Heading into 2013, a total of 11 of the hedge funds we track were bullish in this stock, a change of 57% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes considerably.

According to our comprehensive database, Chuck Royce’s Royce & Associates had the biggest position in Hi-Tech Pharmacal Co. (NASDAQ:HITK), worth close to $48.7 million, comprising 0.2% of its total 13F portfolio. Coming in second is Kevin Kotler of Broadfin Capital, with a $16.6 million position; the fund has 4.1% of its 13F portfolio invested in the stock. Some other peers that are bullish include Samuel Isaly’s OrbiMed Advisors, Cliff Asness’s AQR Capital Management and Mark Kingdon’s Kingdon Capital.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into Hi-Tech Pharmacal Co. (NASDAQ:HITK) headfirst. Kingdon Capital, managed by Mark Kingdon, assembled the most outsized position in Hi-Tech Pharmacal Co. (NASDAQ:HITK). Kingdon Capital had 3.7 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $1.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Neil Chriss’s Hutchin Hill Capital, Paul Tudor Jones’s Tudor Investment Corp, and Ken Griffin’s Citadel Investment Group.

Insider trading activity in Hi-Tech Pharmacal Co. (NASDAQ:HITK)

Insider purchases made by high-level executives is particularly usable when the primary stock in question has seen transactions within the past six months. Over the last half-year time period, Hi-Tech Pharmacal Co. (NASDAQ:HITK) has seen zero unique insiders buying, and 5 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Hi-Tech Pharmacal Co. (NASDAQ:HITK). These stocks are Supernus Pharmaceuticals Inc (NASDAQ:SUPN), Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA), Ligand Pharmaceuticals Inc. (NASDAQ:LGND), Avanir Pharmaceuticals, Inc. (NASDAQ:AVNR), and Sagent Pharmaceuticals Inc (NASDAQ:SGNT). All of these stocks are in the drugs – generic industry and their market caps resemble HITK’s market cap.