Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Retrophin Inc (NASDAQ:RTRX) shareholders have witnessed an increase in hedge fund interest recently. RTRX was in 23 hedge funds’ portfolios at the end of September. There were 18 hedge funds in our database with RTRX holdings at the end of the previous quarter. At the end of this article we will also compare RTRX to other stocks including Rent-A-Center Inc (NASDAQ:RCII), SciClone Pharmaceuticals, Inc. (NASDAQ:SCLN), and Triangle Capital Corporation (NYSE:TCAP) to get a better sense of its popularity.
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What does the smart money think about Retrophin Inc (NASDAQ:RTRX)?
At Q3’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 28% increase from the second quarter of 2016. Hedge funds have been consistently buying into and then selling out of the stock over the past year, creating a W-shaped ownership chart. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Matt Sirovich and Jeremy Mindich’s Scopia Capital has the biggest position in Retrophin Inc (NASDAQ:RTRX), worth close to $95.2 million, accounting for 1.7% of its total 13F portfolio. The second largest stake is held by Broadfin Capital, led by Kevin Kotler, holding a $77.6 million position; the fund has 7% of its 13F portfolio invested in the stock. Other professional money managers that are bullish comprise Mitchell Blutt’s Consonance Capital Management, Joseph Edelman’s Perceptive Advisors and Israel Englander’s Millennium Management.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Kingdon Capital, managed by Mark Kingdon, established the largest position in Retrophin Inc (NASDAQ:RTRX). Kingdon Capital had $8.5 million invested in the company at the end of the quarter. Ken Greenberg and David Kim’s Ghost Tree Capital also initiated a $5.6 million position during the quarter. The other funds with brand new RTRX positions are Siddharth Thacker’s Signpost Capital, Lee Ainslie’s Maverick Capital, and Stuart Weisbrod’s Iguana Healthcare Management.
Let’s go over hedge fund activity in other stocks similar to Retrophin Inc (NASDAQ:RTRX). We will take a look at Rent-A-Center Inc (NASDAQ:RCII), SciClone Pharmaceuticals, Inc. (NASDAQ:SCLN), Triangle Capital Corporation (NYSE:TCAP), and United Financial Bancorp, Inc. (NASDAQ:UBNK). This group of stocks’ market valuations resemble RTRX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RCII | 18 | 73846 | -1 |
| SCLN | 20 | 64807 | 6 |
| TCAP | 6 | 9322 | 3 |
| UBNK | 13 | 31073 | 2 |
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $400 million in RTRX’s case. SciClone Pharmaceuticals, Inc. (NASDAQ:SCLN) is the most popular stock in this table. On the other hand Triangle Capital Corporation (NYSE:TCAP) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Retrophin Inc (NASDAQ:RTRX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers and have a lot more money invested in it, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
