Jazz Pharmaceuticals plc – Ordinary Shares (JAZZ): Are Hedge Funds Right About This Stock?

Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ) has experienced an increase in hedge fund sentiment recently.

If you’d ask most stock holders, hedge funds are perceived as unimportant, old financial tools of the past. While there are over 8000 funds with their doors open today, we choose to focus on the leaders of this group, close to 450 funds. It is estimated that this group oversees most of the smart money’s total asset base, and by watching their best stock picks, we have uncovered a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Equally as integral, optimistic insider trading sentiment is another way to break down the stock market universe. Just as you’d expect, there are a variety of motivations for an insider to get rid of shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this strategy if you understand what to do (learn more here).

Consequently, it’s important to take a look at the latest action regarding Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ).

Hedge fund activity in Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ)

At Q1’s end, a total of 26 of the hedge funds we track were long in this stock, a change of 24% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly.

According to our comprehensive database, Paulson & Co, managed by John Paulson, holds the largest position in Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ). Paulson & Co has a $55.9 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which held a $50.4 million position; 0.2% of its 13F portfolio is allocated to the stock. Remaining hedgies that hold long positions include Arthur B Cohen and Joseph Healey’s Healthcor Management LP, Donald Chiboucis’s Columbus Circle Investors and Philip Hempleman’s Ardsley Partners.

Now, specific money managers were breaking ground themselves. Alydar Capital, managed by John Murphy, established the biggest position in Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ). Alydar Capital had 22.4 million invested in the company at the end of the quarter. Neil Chriss’s Hutchin Hill Capital also initiated a $4.5 million position during the quarter. The following funds were also among the new JAZZ investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Charles Davidson’s Wexford Capital, and Matthew Tewksbury’s Stevens Capital Management.

What have insiders been doing with Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has experienced transactions within the past 180 days. Over the last 180-day time period, Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ). These stocks are Theravance Inc (NASDAQ:THRX), Seattle Genetics, Inc. (NASDAQ:SGEN), Medivation Inc (NASDAQ:MDVN), Incyte Corporation (NASDAQ:INCY), and Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA). All of these stocks are in the biotechnology industry and their market caps are similar to JAZZ’s market cap.