At Insider Monkey we follow around 730 of the best-performing investors and even though many of them lost money in the last several months, the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.
Is Ophthotech Corp (NASDAQ:OPHT) a healthy stock for your portfolio? The smart money is in a bearish mood. The number of bullish hedge fund positions shrunk by 1 in recent months. At the end of this article we will also compare OPHT to other stocks, including Mpg Office Trust Inc (NYSE:MPG), Gamco Investors Inc. (NYSE:GBL), and ITI Inc (NASDAQ:ITCI) to get a better sense of its popularity.
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In today’s marketplace there are plenty of formulas shareholders have at their disposal to evaluate stocks. Some of the less known formulas are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can outpace the market by a significant margin (see the details here).
Now, let’s check out the fresh action surrounding Ophthotech Corp (NASDAQ:OPHT).
How have hedgies been trading Ophthotech Corp (NASDAQ:OPHT)?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, down by 5% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, James H. Litinsky’s JHL Capital Group has the largest position in Ophthotech Corp (NASDAQ:OPHT), worth close to $132.3 million, amounting to 14.6% of its total 13F portfolio. The second largest stake is held by OrbiMed Advisors, managed by Samuel Isaly, which holds a $77.9 million position; 0.8% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish comprise Jim Simons’s Renaissance Technologies, Dmitry Balyasny’s Balyasny Asset Management and James Dondero’s Highland Capital Management.
Judging by the fact that Ophthotech Corp (NASDAQ:OPHT) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of hedge funds that slashed their full holdings by the end of the third quarter. At the top of the heap, Jonathan Lourie and Stuart Fiertz’s Cheyne Capital sold off the biggest position of the “upper crust” of funds followed by Insider Monkey, totaling close to $3.7 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also dumped its stock, about $1 million worth of. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 fund by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Ophthotech Corp (NASDAQ:OPHT) but similarly valued. These stocks are Mpg Office Trust Inc (NYSE:MPG), Gamco Investors Inc. (NYSE:GBL), ITI Inc (NASDAQ:ITCI), and Great Western Bancorp Inc (NYSE:GWB). This group of stocks’ market values resemble OPHT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MPG | 11 | 100640 | 3 |
| GBL | 11 | 27425 | 2 |
| ITCI | 26 | 320207 | 12 |
| GWB | 24 | 274365 | 10 |
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $181 million. That figure was $270 million in OPHT’s case, which is a good sign. ITI Inc (NASDAQ:ITCI) is the most popular stock in this table, while Mpg Office Trust Inc (NYSE:MPG) and Gamco Investors Inc. (NYSE:GBL) are the least popular ones with only 11 bullish hedge fund positions each. Ophthotech Corp (NASDAQ:OPHT) 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 ITCI might be a better candidate to consider a long position.
