It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 5.2% in the 12 month-period that ended October 30, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular S&P 500 stocks among the hedge fund investors tracked by the Insider Monkey team returned 9.5% over the same period, which provides evidence that these money managers do have great stock picking abilities. Even more to that, 63% of these stocks managed to beat the S&P 500 Index. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like La Jolla Pharmaceutical Company (NASDAQ:LJPC).
La Jolla Pharmaceutical Company (NASDAQ:LJPC) was in 14 hedge funds’ portfolios at the end of the third quarter of 2015. La Jolla Pharmaceutical Company (NASDAQ:LJPC) has seen an increase in support from the world’s most elite money managers lately. There were 8 hedge funds in our database with La Jolla Pharmaceutical Company (NASDAQ:LJPC) positions at the end of the previous quarter. The stock market was equally bullish on its shares, with an increase of 13.38% during the quarter. We will discuss hedge funds that maintained positions in La Jolla Pharmaceutical Company (NASDAQ:LJPC), at the end of the previous quarter.
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 C&J Energy Services Inc (NYSE:CJES), Century Communities, Inc (NYSE:CCS), and Patriot National Inc (NYSE:PN) to gather more data points.
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Follow La Jolla Pharmaceutical Co (NASDAQ:LJPC)
In the financial world, there are tons of metrics investors use to size up their stock investments. Some of the best metrics are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can trounce their index-focused peers by a very impressive margin (see the details here).
Keeping this in mind, we’re going to view the new action surrounding La Jolla Pharmaceutical Company (NASDAQ:LJPC).
How have hedgies been trading La Jolla Pharmaceutical Company (NASDAQ:LJPC)?
Heading into Q4, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 75% from the second quarter. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Kevin C. Tang’s Tang Capital Management has the largest position in La Jolla Pharmaceutical Company (NASDAQ:LJPC), worth close to $81 million, amounting to 29.9% of its total 13F portfolio. The second most bullish fund manager is Broadfin Capital, led by Kevin Kotler, holding a $30.4 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish comprise Behzad Aghazadeh’s venBio Select Advisor, Joseph Edelman’s Perceptive Advisors, and Jacob Gottlieb’s Visium Asset Management.
As aggregate interest increased, key money managers were leading the bulls’ herd. Iguana Healthcare Management, managed by Stuart Weisbrod, assembled the most outsized position in La Jolla Pharmaceutical Company (NASDAQ:LJPC). Iguana Healthcare Management had $3.5 million invested in the company at the end of the quarter. Hal Mintz’s Sabby Capital also initiated a $2.4 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, James E. Flynn’s Deerfield Management, and Renaissance Technologies.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as La Jolla Pharmaceutical Company (NASDAQ:LJPC) but similarly valued. These stocks are C&J Energy Services Inc (NYSE:CJES), Century Communities, Inc (NYSE:CCS), Patriot National Inc (NYSE:PN), and Carrols Restaurant Group, Inc. (NASDAQ:TAST). This group of stocks’ market valuations match La Jolla Pharmaceutical Company (NASDAQ:LJPC)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CJES | 19 | 67571 | -1 |
| CCS | 18 | 78743 | 5 |
| PN | 6 | 25270 | 0 |
| TAST | 25 | 120632 | 6 |
As you can see, these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $193 million in La Jolla Pharmaceutical Company (NASDAQ:LJPC)’s case. Carrols Restaurant Group, Inc. (NASDAQ:TAST) is the most popular stock in this table. On the other hand, Patriot National Inc (NYSE:PN) is the least popular one with only 6 bullish hedge fund positions. La Jolla Pharmaceutical Company (NASDAQ:LJPC) 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, Carrols Restaurant Group, Inc. (NASDAQ:TAST) might be a better candidate to consider a long position.
