ISIS Pharmaceuticals, Inc. (ISIS): Hedge Funds and Insiders Are Bearish, What Should You Do?

ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS) was in 5 hedge funds’ portfolio at the end of December. ISIS has seen a decrease in activity from the world’s largest hedge funds in recent months. There were 11 hedge funds in our database with ISIS holdings at the end of the previous quarter.

According to most traders, hedge funds are seen as underperforming, outdated financial tools of years past. While there are more than 8000 funds trading at present, we look at the top tier of this group, close to 450 funds. Most estimates calculate that this group controls the majority of the hedge fund industry’s total asset base, and by monitoring their best equity investments, we have figured out a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).

Equally as beneficial, optimistic insider trading activity is another way to parse down the marketplace. There are plenty of reasons for an executive to downsize shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the impressive potential of this tactic if investors know what to do (learn more here).

With all of this in mind, it’s important to take a gander at the recent action surrounding ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS).

How have hedgies been trading ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS)?

At the end of the fourth quarter, a total of 5 of the hedge funds we track held long positions in this stock, a change of -55% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully.

When looking at the hedgies we track, Bridger Management, managed by Roberto Mignone, holds the most valuable position in ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS). Bridger Management has a $5.7 million position in the stock, comprising 0.4% of its 13F portfolio. On Bridger Management’s heels is Ken Griffin of Citadel Investment Group, with a $0.6 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedgies with similar optimism include Cliff Asness’s AQR Capital Management, and Ken Griffin’s Citadel Investment Group.

Judging by the fact that ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS) has faced a declination in interest from the entirety of the hedge funds we track, logic holds that there was a specific group of hedgies that elected to cut their full holdings at the end of the year. At the top of the heap, Drew Cupps’s Cupps Capital Management cut the largest investment of the “upper crust” of funds we watch, valued at about $8.2 million in stock.. Sean Cullinan’s fund, Point State Capital, also dumped its stock, about $6.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 6 funds at the end of the year.

How are insiders trading ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS)?

Insider purchases made by high-level executives is particularly usable when the company we’re looking at has seen transactions within the past six months. Over the latest 180-day time period, ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS) has experienced zero unique insiders purchasing, and 8 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS). These stocks are United Therapeutics Corporation (NASDAQ:UTHR), Cubist Pharmaceuticals Inc (NASDAQ:CBST), Amarin Corporation plc (ADR) (NASDAQ:AMRN), Taro Pharmaceutical Industries Ltd. (NYSE:TARO), and The Medicines Company (NASDAQ:MDCO). All of these stocks are in the drug manufacturers – other industry and their market caps are closest to ISIS’s market cap.

With the results demonstrated by the aforementioned strategies, retail investors should always pay attention to hedge fund and insider trading activity, and ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS) is an important part of this process.

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