Should You Buy 3SBio Inc. (ADR) (SSRX)?

3SBio Inc. (ADR) (NASDAQ:SSRX) has seen an increase in enthusiasm from smart money in recent months.

In today’s marketplace, there are plenty of gauges market participants can use to watch Mr. Market. Two of the most under-the-radar are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top fund managers can trounce the broader indices by a healthy amount (see just how much).

Just as integral, optimistic insider trading sentiment is a second way to parse down the financial markets. Obviously, there are a number of stimuli for a corporate insider to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Several empirical studies have demonstrated the useful potential of this tactic if “monkeys” understand what to do (learn more here).

Consequently, let’s take a look at the recent action regarding 3SBio Inc. (ADR) (NASDAQ:SSRX).

What does the smart money think about 3SBio Inc. (ADR) (NASDAQ:SSRX)?

At the end of the first quarter, a total of 11 of the hedge funds we track held long positions in this stock, a change of 22% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes meaningfully.

According to our comprehensive database, Samuel Isaly’s OrbiMed Advisors had the most valuable position in 3SBio Inc. (ADR) (NASDAQ:SSRX), worth close to $31.9 million, comprising 0.7% of its total 13F portfolio. On OrbiMed Advisors’s heels is Sectoral Asset Management, managed by Jerome Pfund and Michael Sjostrom, which held a $10.8 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining hedgies with similar optimism include Jim Simons’s Renaissance Technologies, Matthew Tewksbury’s Stevens Capital Management and D. E. Shaw’s D E Shaw.

Consequently, key hedge funds were breaking ground themselves. Stevens Capital Management, managed by Matthew Tewksbury, created the largest position in 3SBio Inc. (ADR) (NASDAQ:SSRX). Stevens Capital Management had 4.3 million invested in the company at the end of the quarter. Brian Stark’s Stark Investments also initiated a $0.7 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Paul Touradji’s TOURADJI CAPITAL MANAGEMENT, LP, and Ken Griffin’s Citadel Investment Group.

How are insiders trading 3SBio Inc. (ADR) (NASDAQ:SSRX)?

Insider purchases made by high-level executives is at its handiest when the company in question has seen transactions within the past half-year. Over the last 180-day time frame, 3SBio Inc. (ADR) (NASDAQ:SSRX) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to 3SBio Inc. (ADR) (NASDAQ:SSRX). These stocks are Obagi Medical Products, Inc. (NASDAQ:OMPI), Vical Incorporated (NASDAQ:VICL), Osiris Therapeutics, Inc. (NASDAQ:OSIR), Novavax, Inc. (NASDAQ:NVAX), and XenoPort, Inc. (NASDAQ:XNPT). All of these stocks are in the biotechnology industry and their market caps are similar to SSRX’s market cap.