How do we determine whether Intec Pharma Ltd (NASDAQ:NTEC) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Is Intec Pharma Ltd (NASDAQ:NTEC) a buy right now? The best stock pickers are becoming more confident. The number of long hedge fund positions increased by 2 lately. Our calculations also showed that NTEC isn’t among the 30 most popular stocks among hedge funds. NTEC was in 11 hedge funds’ portfolios at the end of September. There were 9 hedge funds in our database with NTEC positions at the end of the previous quarter.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let’s view the recent hedge fund action encompassing Intec Pharma Ltd (NASDAQ:NTEC).
What does the smart money think about Intec Pharma Ltd (NASDAQ:NTEC)?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 22% from the previous quarter. By comparison, 7 hedge funds held shares or bullish call options in NTEC heading into this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Intec Pharma Ltd (NASDAQ:NTEC) was held by venBio Select Advisor, which reported holding $14.5 million worth of stock at the end of September. It was followed by Adage Capital Management with a $11.4 million position. Other investors bullish on the company included Prosight Capital, Sectoral Asset Management, and DAFNA Capital Management.
Consequently, key hedge funds have jumped into Intec Pharma Ltd (NASDAQ:NTEC) headfirst. 683 Capital Partners, managed by Ari Zweiman, established the largest position in Intec Pharma Ltd (NASDAQ:NTEC). 683 Capital Partners had $0.8 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also made a $0.5 million investment in the stock during the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Intec Pharma Ltd (NASDAQ:NTEC) but similarly valued. We will take a look at RedHill Biopharma Ltd (NASDAQ:RDHL), Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX), Beasley Broadcast Group Inc (NASDAQ:BBGI), and Calithera Biosciences Inc (NASDAQ:CALA). All of these stocks’ market caps resemble NTEC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RDHL | 4 | 37372 | 1 |
| SNDX | 8 | 27530 | -1 |
| BBGI | 7 | 12663 | 5 |
| CALA | 8 | 22815 | -1 |
| Average | 6.75 | 25095 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $47 million in NTEC’s case. Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX) is the most popular stock in this table. On the other hand RedHill Biopharma Ltd (NASDAQ:RDHL) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Intec Pharma Ltd (NASDAQ:NTEC) 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.
Disclosure: None. This article was originally published at Insider Monkey.
