Is Insys Therapeutics Inc (NASDAQ:INSY) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They fail miserably sometimes, but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Insys Therapeutics Inc (NASDAQ:INSY) has experienced a decrease in hedge fund sentiment of late. 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 First Financial Bankshares Inc (NASDAQ:FFIN), Louisiana-Pacific Corporation (NYSE:LPX), and Monolithic Power Systems, Inc. (NASDAQ:MPWR) to gather more data points.
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In today’s marketplace there are tons of indicators stock traders have at their disposal to assess stocks. Two of the most innovative indicators are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can outclass their index-focused peers by a very impressive margin (see the details here).
Keeping this in mind, let’s review the recent action regarding Insys Therapeutics Inc (NASDAQ:INSY).
How are hedge funds trading Insys Therapeutics Inc (NASDAQ:INSY)?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the previous quarter. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Samuel Isaly’s OrbiMed Advisors has the most valuable position in Insys Therapeutics Inc (NASDAQ:INSY), worth close to $116.2 million, comprising 1.2% of its total 13F portfolio. The second most bullish fund manager is Consonance Capital Management, led by Mitchell Blutt, holding a $92.7 million position; the fund has 13% of its 13F portfolio invested in the stock. Some other peers with similar optimism contain Matt Sirovich and Jeremy Mindich’s Scopia Capital, Ken Griffin’s Citadel Investment Group and Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management.
Judging by the fact that Insys Therapeutics Inc (NASDAQ:INSY) has witnessed a decline in interest from the aggregate hedge fund industry, we can see that there were a few hedge funds who sold off their full holdings in the third quarter. It’s worth mentioning that Alok Agrawal’s Bloom Tree Partners sold off the largest investment of the “upper crust” of funds followed by Insider Monkey, valued at about $25.3 million in stock. Peter Muller’s fund, PDT Partners, also dumped its stock, about $8.8 million worth. These moves are interesting, as total hedge fund interest fell by 5 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Insys Therapeutics Inc (NASDAQ:INSY). These stocks are First Financial Bankshares Inc (NASDAQ:FFIN), Louisiana-Pacific Corporation (NYSE:LPX), Monolithic Power Systems, Inc. (NASDAQ:MPWR), and Rowan Companies PLC (NYSE:RDC). This group of stocks’ market values resemble INSY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FFIN | 5 | 9428 | -3 |
| LPX | 20 | 327190 | 4 |
| MPWR | 16 | 220382 | 0 |
| RDC | 21 | 481508 | -3 |
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $260 million. That figure was $313 million in INSY’s case. Rowan Companies PLC (NYSE:RDC) is the most popular stock in this table, while First Financial Bankshares Inc (NASDAQ:FFIN) is the least popular one with only 5 bullish hedge fund positions. Insys Therapeutics Inc (NASDAQ:INSY) 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 RDC might be a better candidate to consider a long position.
