The financial regulations require hedge funds and wealthy investors that crossed the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 28th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Portola Pharmaceuticals Inc (NASDAQ:PTLA) based on those filings.
Portola Pharmaceuticals Inc (NASDAQ:PTLA) was in 18 hedge funds’ portfolios at the end of June. PTLA investors should pay attention to a decrease in hedge fund interest recently. There were 20 hedge funds in our database with PTLA positions at the end of the previous quarter. Our calculations also showed that PTLA isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the fresh hedge fund action surrounding Portola Pharmaceuticals Inc (NASDAQ:PTLA).
How are hedge funds trading Portola Pharmaceuticals Inc (NASDAQ:PTLA)?
At the end of the second quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the previous quarter. By comparison, 18 hedge funds held shares or bullish call options in PTLA a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Cadian Capital held the most valuable stake in Portola Pharmaceuticals Inc (NASDAQ:PTLA), which was worth $111 million at the end of the second quarter. On the second spot was Highland Capital Management which amassed $43.2 million worth of shares. Moreover, Rock Springs Capital Management, Sectoral Asset Management, and Tamarack Capital Management were also bullish on Portola Pharmaceuticals Inc (NASDAQ:PTLA), allocating a large percentage of their portfolios to this stock.
Because Portola Pharmaceuticals Inc (NASDAQ:PTLA) has faced falling interest from the smart money, it’s easy to see that there lies a certain “tier” of money managers who sold off their positions entirely by the end of the second quarter. Intriguingly, James E. Flynn’s Deerfield Management said goodbye to the biggest investment of all the hedgies watched by Insider Monkey, worth close to $90.8 million in stock. Louis Bacon’s fund, Moore Global Investments, also sold off its stock, about $5.2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 2 funds by the end of the second quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Portola Pharmaceuticals Inc (NASDAQ:PTLA) but similarly valued. These stocks are SailPoint Technologies Holdings, Inc. (NYSE:SAIL), Kronos Worldwide, Inc. (NYSE:KRO), Plexus Corp. (NASDAQ:PLXS), and Kaman Corporation (NYSE:KAMN). This group of stocks’ market caps match PTLA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SAIL | 22 | 290722 | -5 |
| KRO | 12 | 31123 | -1 |
| PLXS | 8 | 50959 | -1 |
| KAMN | 14 | 237265 | 2 |
| Average | 14 | 152517 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $153 million. That figure was $263 million in PTLA’s case. SailPoint Technologies Holdings, Inc. (NYSE:SAIL) is the most popular stock in this table. On the other hand Plexus Corp. (NASDAQ:PLXS) is the least popular one with only 8 bullish hedge fund positions. Portola Pharmaceuticals Inc (NASDAQ:PTLA) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately PTLA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PTLA were disappointed as the stock returned -1.1% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
