Is VNDA A Good Stock To Buy Now According To Hedge Funds?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Vanda Pharmaceuticals Inc. (NASDAQ:VNDA).

Is VNDA a good stock to buy now? Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) investors should be aware of an increase in enthusiasm from smart money recently. Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) was in 22 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 25. There were 19 hedge funds in our database with VNDA holdings at the end of June. Our calculations also showed that VNDA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

William Leland Edwards of Palo Alto Investors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to take a look at the latest hedge fund action regarding Vanda Pharmaceuticals Inc. (NASDAQ:VNDA).

Do Hedge Funds Think VNDA Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16% from the previous quarter. By comparison, 20 hedge funds held shares or bullish call options in VNDA a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Steven Boyd’s Armistice Capital has the most valuable position in Vanda Pharmaceuticals Inc. (NASDAQ:VNDA), worth close to $52.6 million, accounting for 1.9% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, with a $42.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism consist of William Leland Edwards’s Palo Alto Investors, Ken Griffin’s Citadel Investment Group and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Palo Alto Investors allocated the biggest weight to Vanda Pharmaceuticals Inc. (NASDAQ:VNDA), around 2.21% of its 13F portfolio. Armistice Capital is also relatively very bullish on the stock, earmarking 1.91 percent of its 13F equity portfolio to VNDA.

As industrywide interest jumped, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, assembled the most valuable position in Vanda Pharmaceuticals Inc. (NASDAQ:VNDA). Millennium Management had $1.6 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also initiated a $0.3 million position during the quarter. The only other fund with a brand new VNDA position is Donald Sussman’s Paloma Partners.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) but similarly valued. We will take a look at Hycroft Mining Holding Corporation (NASDAQ:HYMC), Radius Health Inc (NASDAQ:RDUS), Yintech Investment Holdings Limited (NASDAQ:YIN), Mitek Systems, Inc. (NASDAQ:MITK), Universal Electronics Inc (NASDAQ:UEIC), Aptose Biosciences Inc (NASDAQ:APTO), and 89bio, Inc. (NASDAQ:ETNB). This group of stocks’ market caps are similar to VNDA’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.6 hedge funds with bullish positions and the average amount invested in these stocks was $150 million. That figure was $171 million in VNDA’s case. Radius Health Inc (NASDAQ:RDUS) is the most popular stock in this table. On the other hand Yintech Investment Holdings Limited (NASDAQ:YIN) is the least popular one with only 3 bullish hedge fund positions. Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VNDA is 84.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on VNDA as the stock returned 35.2% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.