Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETF by 4 percentage points so far this year. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Pacira BioSciences, Inc. (NASDAQ:PCRX) from the perspective of those elite funds.
Is Pacira BioSciences, Inc. (NASDAQ:PCRX) ready to rally soon? Hedge funds are taking a bullish view. The number of bullish hedge fund bets rose by 1 recently. Our calculations also showed that PCRX isn’t among the 30 most popular stocks among hedge funds (see the video below). PCRX was in 28 hedge funds’ portfolios at the end of the second quarter of 2019. There were 27 hedge funds in our database with PCRX positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to check out the new hedge fund action surrounding Pacira BioSciences, Inc. (NASDAQ:PCRX).
How have hedgies been trading Pacira BioSciences, Inc. (NASDAQ:PCRX)?
At the end of the second quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PCRX over the last 16 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mitchell Blutt’s Consonance Capital Management has the biggest position in Pacira BioSciences, Inc. (NASDAQ:PCRX), worth close to $121.8 million, corresponding to 8.6% of its total 13F portfolio. The second largest stake is held by Israel Englander of Millennium Management, with a $64.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that hold long positions consist of Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management, D. E. Shaw’s D E Shaw and Steve Cohen’s Point72 Asset Management.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, created the most valuable position in Pacira BioSciences, Inc. (NASDAQ:PCRX). Balyasny Asset Management had $8.2 million invested in the company at the end of the quarter. Ori Hershkovitz’s Nexthera Capital also made a $6.5 million investment in the stock during the quarter. The following funds were also among the new PCRX investors: Michael Gelband’s ExodusPoint Capital, Nick Thakore’s Diametric Capital, and Noam Gottesman’s GLG Partners.
Let’s now take a look at hedge fund activity in other stocks similar to Pacira BioSciences, Inc. (NASDAQ:PCRX). We will take a look at CNOOC Limited (NYSE:CEO), Shutterfly, Inc. (NASDAQ:SFLY), Bandwidth Inc. (NASDAQ:BAND), and Chesapeake Lodging Trust (NYSE:CHSP). This group of stocks’ market valuations resemble PCRX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CEO | 9 | 257781 | -4 |
| SFLY | 24 | 307901 | -4 |
| BAND | 18 | 184105 | -5 |
| CHSP | 11 | 34294 | -1 |
| Average | 15.5 | 196020 | -3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $196 million. That figure was $583 million in PCRX’s case. Shutterfly, Inc. (NASDAQ:SFLY) is the most popular stock in this table. On the other hand CNOOC Limited (NYSE:CEO) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Pacira BioSciences, Inc. (NASDAQ:PCRX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately PCRX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PCRX were disappointed as the stock returned -12.5% during the third quarter 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 many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
