Ligand Pharmaceuticals Inc. (LGND): Hedge Fund Sentiment Unchanged

Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze Ligand Pharmaceuticals Inc. (NASDAQ:LGND) from the perspective of those successful funds.

Hedge fund interest in Ligand Pharmaceuticals Inc. (NASDAQ:LGND) shares was flat at the end of last quarter. There were 16 hedge funds in our database with TIME holdings at the end of September, same as in the previous quarter. This is usually a negative indicator. At the end of this article we will also compare LGND to other stocks including Grifols SA, Barcelona (NASDAQ:GRFS), Wintrust Financial Corp (NASDAQ:WTFC), and Nice Systems Ltd (ADR) (NASDAQ:NICE) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Hedge fund activity in Ligand Pharmaceuticals Inc. (NASDAQ:LGND)

Heading into the fourth quarter of 2016, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LGND over the last 5 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, David M. Knott’s Dorset Management has the largest position in Ligand Pharmaceuticals Inc. (NASDAQ:LGND), worth close to $101.9 million, accounting for 52.6% of its total 13F portfolio. The second most bullish fund manager is Cardinal Capital, led by Amy Minella, holding a $68.8 million position; 3.2% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism encompass Julian Baker and Felix Baker’s Baker Bros. Advisors, Ken Fisher’s Fisher Asset Management and Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management. We should note that Dorset Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Due to the fact that Ligand Pharmaceuticals Inc. (NASDAQ:LGND) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there exists a select few fund managers who were dropping their positions entirely by the end of the third quarter. At the top of the heap, Jim Simons’ Renaissance Technologies cashed in the largest investment of the 700 funds watched by Insider Monkey, comprising an estimated $13.8 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund sold off about $3.8 million worth of shares.

Let’s now take a look at hedge fund activity in other stocks similar to Ligand Pharmaceuticals Inc. (NASDAQ:LGND). These stocks are Grifols SA, Barcelona (NASDAQ:GRFS), Wintrust Financial Corp (NASDAQ:WTFC), Nice Systems Ltd (ADR) (NASDAQ:NICE), and United States Steel Corporation (NYSE:X). This group of stocks’ market valuations resemble LGND’s market valuation.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $330 million. That figure was $214 million in LGND’s case. United States Steel Corporation (NYSE:X) is the most popular stock in this table. On the other hand Grifols SA, Barcelona (NASDAQ:GRFS) is the least popular one with only 12 bullish hedge fund positions. Ligand Pharmaceuticals Inc. (NASDAQ:LGND) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard X might be a better candidate to consider taking a long position in.

Disclosure: None