Onyx Pharmaceuticals, Inc. (ONXX): Are Hedge Funds Right About This Stock?

Is Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) the right investment to pursue these days? Prominent investors are betting on the stock. The number of long hedge fund positions rose by 2 in recent months.

In the eyes of most investors, hedge funds are seen as unimportant, outdated financial tools of yesteryear. While there are greater than 8000 funds with their doors open at the moment, we choose to focus on the top tier of this group, about 450 funds. It is widely believed that this group oversees most of all hedge funds’ total capital, and by keeping an eye on their best equity investments, we have spotted a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually 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 23.3 percentage points in 8 months (see all of our picks from August).

Just as key, bullish insider trading activity is a second way to parse down the world of equities. Just as you’d expect, there are many stimuli for an upper level exec to cut shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the market-beating potential of this strategy if shareholders know what to do (learn more here).

Now, we’re going to take a gander at the key action regarding Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX).

What have hedge funds been doing with Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX)?

Heading into Q2, a total of 29 of the hedge funds we track were long in this stock, a change of 7% from the first quarter. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes considerably.

When looking at the hedgies we track, Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management had the most valuable position in Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX), worth close to $131.7 million, comprising 4.1% of its total 13F portfolio. On Sectoral Asset Management’s heels is Palo Alto Investors, managed by William Leland Edwards, which held a $131.2 million position; 15.5% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include Samuel Isaly’s OrbiMed Advisors, Ken Griffin’s Citadel Investment Group and Phill Gross and Robert Atchinson’s Adage Capital Management.

With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Bennett Lawrence Management, managed by Van Schreiber, initiated the biggest position in Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX). Bennett Lawrence Management had 15.2 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $11.7 million investment in the stock during the quarter. The other funds with brand new ONXX positions are D. E. Shaw’s D E Shaw, Thomas Steyer’s Farallon Capital, and Israel Englander’s Millennium Management.

How have insiders been trading Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX)?

Bullish insider trading is at its handiest when the company we’re looking at has experienced transactions within the past 180 days. Over the last half-year time period, Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) has experienced zero unique insiders buying, and 13 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX). These stocks are Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), Medivation Inc (NASDAQ:MDVN), Seattle Genetics, Inc. (NASDAQ:SGEN), BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), and Illumina, Inc. (NASDAQ:ILMN). All of these stocks are in the biotechnology industry and their market caps resemble ONXX’s market cap.