Is Insmed Incorporated (NASDAQ:INSM) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Insmed Incorporated (NASDAQ:INSM) investors should be aware of an increase in support from the world’s most elite money managers recently. Our calculations also showed that insm isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We’re going to review the fresh hedge fund action regarding Insmed Incorporated (NASDAQ:INSM).
What have hedge funds been doing with Insmed Incorporated (NASDAQ:INSM)?
At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in INSM over the last 15 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Palo Alto Investors, managed by William Leland Edwards, holds the number one position in Insmed Incorporated (NASDAQ:INSM). Palo Alto Investors has a $222.5 million position in the stock, comprising 9.3% of its 13F portfolio. Sitting at the No. 2 spot is Baker Bros. Advisors, managed by Julian Baker and Felix Baker, which holds a $60.4 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Remaining peers with similar optimism comprise Albert Cha and Frank Kung’s Vivo Capital, Ken Griffin’s Citadel Investment Group and Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management.
Now, key hedge funds have been driving this bullishness. Vivo Capital, managed by Albert Cha and Frank Kung, created the most outsized position in Insmed Incorporated (NASDAQ:INSM). Vivo Capital had $34 million invested in the company at the end of the quarter. Howard Marks’s Oaktree Capital Management also initiated a $11.2 million position during the quarter. The following funds were also among the new INSM investors: Joseph Samuels’s Islet Management, Michael S. Weiss and Lindsay A. Rosenwald’s Opus Point Partners Management, and James Dondero’s Highland Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Insmed Incorporated (NASDAQ:INSM) but similarly valued. These stocks are TopBuild Corp (NYSE:BLD), Acadia Realty Trust (NYSE:AKR), Matador Resources Co (NYSE:MTDR), and Norbord Inc. (NYSE:OSB). This group of stocks’ market caps are similar to INSM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BLD | 17 | 107962 | 3 |
| AKR | 10 | 110647 | -1 |
| MTDR | 14 | 139097 | 4 |
| OSB | 7 | 26488 | 0 |
| Average | 12 | 96049 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $457 million in INSM’s case. TopBuild Corp (NYSE:BLD) is the most popular stock in this table. On the other hand Norbord Inc. (NYSE:OSB) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Insmed Incorporated (NASDAQ:INSM) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately INSM wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on INSM were disappointed as the stock returned -13.6% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
