Should You Avoid Targacept , Inc. (TRGT)?

Is Targacept , Inc. (NASDAQ:TRGT) a buy right now? Prominent investors are turning less bullish. The number of long hedge fund bets dropped by 1 lately.

To the average investor, there are plenty of gauges shareholders can use to watch their holdings. A couple of the best are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite money managers can outclass the broader indices by a healthy margin (see just how much).

Equally as beneficial, positive insider trading activity is another way to break down the stock market universe. Just as you’d expect, there are lots of incentives for a corporate insider to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Several empirical studies have demonstrated the impressive potential of this tactic if you know what to do (learn more here).

With all of this in mind, we’re going to take a glance at the latest action regarding Targacept , Inc. (NASDAQ:TRGT).

What have hedge funds been doing with Targacept , Inc. (NASDAQ:TRGT)?

At Q1’s end, a total of 9 of the hedge funds we track were long in this stock, a change of -10% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes meaningfully.

According to our comprehensive database, D. E. Shaw’s D E Shaw had the biggest position in Targacept , Inc. (NASDAQ:TRGT), worth close to $1.6 million, comprising less than 0.1%% of its total 13F portfolio. Coming in second is Jim Simons of Renaissance Technologies, with a $1.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedgies that hold long positions include Israel Englander’s Millennium Management, Jacob Gottlieb’s Visium Asset Management and Sander Gerber’s Hudson Bay Capital Management.

Seeing as Targacept , Inc. (NASDAQ:TRGT) has faced a declination in interest from the aggregate hedge fund industry, logic holds that there is a sect of fund managers who were dropping their positions entirely at the end of the first quarter. Intriguingly, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners cut the biggest investment of the 450+ funds we monitor, worth an estimated $0.1 million in stock.. Peter Algert and Kevin Coldiron’s fund, Algert Coldiron Investors, also dumped its stock, about $0.1 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 1 funds at the end of the first quarter.

What have insiders been doing with Targacept , Inc. (NASDAQ:TRGT)?

Insider buying is particularly usable when the company we’re looking at has experienced transactions within the past 180 days. Over the latest 180-day time period, Targacept , Inc. (NASDAQ:TRGT) has experienced 2 unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Targacept , Inc. (NASDAQ:TRGT). These stocks are ZIOPHARM Oncology Inc. (NASDAQ:ZIOP), Chelsea Therapeutics International Ltd. (NASDAQ:CHTP), Geron Corporation (NASDAQ:GERN), and Pacific Biosciences of California (NASDAQ:PACB). This group of stocks belong to the biotechnology industry and their market caps match TRGT’s market cap.

With the results exhibited by Insider Monkey’s tactics, everyday investors should always monitor hedge fund and insider trading activity, and Targacept , Inc. (NASDAQ:TRGT) applies perfectly to this mantra.

Click here to learn why you should track hedge funds