Should You Buy InterMune Inc (ITMN)?

InterMune Inc (NASDAQ:ITMN) investors should be aware of an increase in enthusiasm from smart money in recent months.

In the 21st century investor’s toolkit, there are plenty of methods investors can use to analyze stocks. Two of the most useful are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the market by a solid amount (see just how much).

Equally as key, optimistic insider trading activity is a second way to break down the investments you’re interested in. Just as you’d expect, there are lots of motivations for a corporate insider to cut shares of his or her company, but just one, very clear reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this strategy if you know where to look (learn more here).

Consequently, it’s important to take a glance at the recent action encompassing InterMune Inc (NASDAQ:ITMN).

How have hedgies been trading InterMune Inc (NASDAQ:ITMN)?

At Q1’s end, a total of 25 of the hedge funds we track were long in this stock, a change of 67% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably.

Of the funds we track, Sectoral Asset Management, managed by Jerome Pfund and Michael Sjostrom, holds the biggest position in InterMune Inc (NASDAQ:ITMN). Sectoral Asset Management has a $43.3 million position in the stock, comprising 1.3% of its 13F portfolio. On Sectoral Asset Management’s heels is Daniel Gold of QVT Financial, with a $37.4 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Steven Cohen’s SAC Capital Advisors, Jacob Gottlieb’s Visium Asset Management and Arthur B Cohen and Joseph Healey’s Healthcor Management LP.

With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Visium Asset Management, managed by Jacob Gottlieb, established the most outsized position in InterMune Inc (NASDAQ:ITMN). Visium Asset Management had 27.2 million invested in the company at the end of the quarter. Arthur B Cohen and Joseph Healey’s Healthcor Management LP also made a $18.3 million investment in the stock during the quarter. The following funds were also among the new ITMN investors: Stephen DuBois’s Camber Capital Management, Sanford J. Colen’s Apex Capital, and Mark Kingdon’s Kingdon Capital.

What have insiders been doing with InterMune Inc (NASDAQ:ITMN)?

Bullish insider trading is best served when the company we’re looking at has seen transactions within the past six months. Over the last 180-day time frame, InterMune Inc (NASDAQ:ITMN) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to InterMune Inc (NASDAQ:ITMN). These stocks are Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN), TESARO Inc (NASDAQ:TSRO), Clovis Oncology Inc (NASDAQ:CLVS), China Biologic Products Inc (NASDAQ:CBPO), and Dendreon Corporation (NASDAQ:DNDN). This group of stocks belong to the biotechnology industry and their market caps resemble ITMN’s market cap.

With the returns exhibited by the aforementioned time-tested strategies, everyday investors should always watch hedge fund and insider trading activity, and InterMune Inc (NASDAQ:ITMN) applies perfectly to this mantra.

Click here to learn why you should track hedge funds