PDL BioPharma Inc. (PDLI): Hedge Fund and Insider Sentiment Unchanged, What Should You Do?

Should PDL BioPharma Inc. (NASDAQ:PDLI) investors track the following data?

In the eyes of many market players, hedge funds are seen as overrated, old investment tools of a period lost to current times. Although there are In excess of 8,000 hedge funds with their doors open in present day, this site looks at the moguls of this group, close to 525 funds. It is widely held that this group controls the lion’s share of all hedge funds’ total capital, and by paying attention to their highest quality investments, we’ve unsheathed a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a 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 outperformed the S&P 500 index by 33 percentage points in 11 months (find the details here).

Equally as crucial, optimistic insider trading sentiment is a second way to analyze the investments you’re interested in. Obviously, there are lots of incentives for an upper level exec to drop shares of his or her company, but only one, very simple reason why they would behave bullishly. Several academic studies have demonstrated the market-beating potential of this strategy if you know where to look (learn more here).

Now that that’s out of the way, let’s discuss the recent info for PDL BioPharma Inc. (NASDAQ:PDLI).

How are hedge funds trading PDL BioPharma Inc. (NASDAQ:PDLI)?

At the end of the second quarter, a total of 13 of the hedge funds we track were bullish in this stock, a change of 0% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially.

When using filings from the hedgies we track, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in PDL BioPharma Inc. (NASDAQ:PDLI). Renaissance Technologies has a $92.6 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is AQR Capital Management, managed by Cliff Asness, which held a $23 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining hedge funds that hold long positions include Joel Greenblatt’s Gotham Asset Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and John Overdeck and David Siegel’s Two Sigma Advisors.

Judging by the fact that PDL BioPharma Inc. (NASDAQ:PDLI) has experienced declining interest from the top-tier hedge fund industry, it’s safe to say that there is a sect of hedgies that slashed their entire stakes heading into Q2. Interestingly, Bill Miller’s Legg Mason Capital Management cut the largest investment of the 450+ funds we key on, totaling close to $0.6 million in stock. D. E. Shaw’s fund, D E Shaw, also cut its stock, about $0.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading PDL BioPharma Inc. (NASDAQ:PDLI)?

Bullish insider trading is particularly usable when the company we’re looking at has seen transactions within the past 180 days. Over the last half-year time frame, PDL BioPharma Inc. (NASDAQ:PDLI) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also take a look at the relationship between both of these indicators in other stocks similar to PDL BioPharma Inc. (NASDAQ:PDLI). These stocks are Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX), Santarus, Inc. (NASDAQ:SNTS), VIVUS, Inc. (NASDAQ:VVUS), Puma Biotechnology Inc (NYSE:PBYI), and MannKind Corporation (NASDAQ:MNKD). This group of stocks belong to the biotechnology industry and their market caps are similar to PDLI’s market cap.