Is AcelRx Pharmaceuticals Inc (NASDAQ:ACRX) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They fail miserably sometimes, but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Is AcelRx Pharmaceuticals the right pick for your portfolio? The stock is not very popular among the funds we track and the number of long hedge fund bets went down by 2 during the third quarter as the stock lost 23% of its value in the same period. However, the level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Cherokee Inc. (NASDAQ:CHKE), Global Partner Acquisition Corp. (NASDAQ:GPAC), and hhgregg, Inc. (NYSE:HGG) to gather more data points.
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In the eyes of most shareholders, hedge funds are assumed to be unimportant, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading today, Our experts choose to focus on the masters of this club, approximately 700 funds. Most estimates calculate that this group of people have their hands on bulk of the smart money’s total capital, and by following their unrivaled picks, Insider Monkey has spotted various investment strategies that have historically outrun the market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points a year for a decade in their back tests.
With all of this in mind, let’s review the latest action surrounding AcelRx Pharmaceuticals Inc (NASDAQ:ACRX).
How are hedge funds trading AcelRx Pharmaceuticals Inc (NASDAQ:ACRX)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 17% from one quarter earlier. Despite the decline, there still exists a number of investors that own substantial positions in the company.
According to Insider Monkey’s hedge fund database, Perceptive Advisors, managed by Joseph Edelman, holds the most valuable position in AcelRx Pharmaceuticals Inc (NASDAQ:ACRX). Perceptive Advisors has a $19.1 million position in the stock, comprising 1.5% of its 13F portfolio. The second most bullish fund is Palo Alto Investors, led by William Leland Edwards, holding a $5.1 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism include Bihua Chen’s Cormorant Asset Management, D. E. Shaw’s D E Shaw, and Hal Mintz’s Sabby Capital.
However, due to the fact that AcelRx Pharmaceuticals Inc (NASDAQ:ACRX) has experienced a decline in interest from hedge fund managers, it’s safe to say that there was a specific group of hedge funds that decided to sell off their entire stakes heading into Q4. Interestingly, William Michaelcheck’s Mariner Investment Group sold off the biggest stake of all the hedgies monitored by Insider Monkey, comprising an estimated $0.3 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund sold off about $0.1 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 2 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to AcelRx Pharmaceuticals Inc (NASDAQ:ACRX). These stocks are Cherokee Inc. (NASDAQ:CHKE), Global Partner Acquisition Corp. (NASDAQ:GPAC), hhgregg, Inc. (NYSE:HGG), and Sharps Compliance Corp. (NASDAQ:SMED). This group of stocks’ market valuations are closest to ACRX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHKE | 8 | 38993 | -2 |
| GPAC | 9 | 51900 | 9 |
| HGG | 8 | 11739 | 0 |
| SMED | 5 | 3923 | 1 |
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $29 million in ACRX’s case. Global Partner Acquisition Corp. (NASDAQ:GPAC) is the most popular stock in this table with a total of nine funds reporting long positions. On the other hand Sharps Compliance Corp. (NASDAQ:SMED) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks AcelRx Pharmaceuticals Inc (NASDAQ:ACRX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
