Should You Buy POZEN Inc. (POZN)?

POZEN Inc. (NASDAQ:POZN) was in 11 hedge funds’ portfolio at the end of the first quarter of 2013. POZN investors should pay attention to an increase in support from the world’s most elite money managers recently. There were 8 hedge funds in our database with POZN holdings at the end of the previous quarter.

To most investors, hedge funds are assumed to be unimportant, outdated investment vehicles of years past. While there are over 8000 funds in operation at present, we at Insider Monkey hone in on the moguls of this club, around 450 funds. It is widely believed that this group oversees most of the hedge fund industry’s total capital, and by paying attention to their best stock picks, we have unsheathed a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as key, optimistic insider trading sentiment is another way to parse down the stock market universe. Just as you’d expect, there are many reasons for an upper level exec to cut shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the market-beating potential of this strategy if investors know what to do (learn more here).

Consequently, let’s take a glance at the key action surrounding POZEN Inc. (NASDAQ:POZN).

What does the smart money think about POZEN Inc. (NASDAQ:POZN)?

At the end of the first quarter, a total of 11 of the hedge funds we track were long in this stock, a change of 38% from the previous quarter. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes substantially.

Of the funds we track, PAR Capital Management, managed by Paul Reeder and Edward Shapiro, holds the most valuable position in POZEN Inc. (NASDAQ:POZN). PAR Capital Management has a $15.8 million position in the stock, comprising 0.5% of its 13F portfolio. On PAR Capital Management’s heels is Ariel Investments, managed by John W. Rogers, which held a $4.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Cliff Asness’s AQR Capital Management, D. E. Shaw’s D E Shaw and Jim Simons’s Renaissance Technologies.

Consequently, some big names were leading the bulls’ herd. Ariel Investments, managed by John W. Rogers, created the most outsized position in POZEN Inc. (NASDAQ:POZN). Ariel Investments had 4.1 million invested in the company at the end of the quarter. Mark A. Nordlicht’s Platinum Management also made a $0.1 million investment in the stock during the quarter. The following funds were also among the new POZN investors: John Overdeck and David Siegel’s Two Sigma Advisors and Mike Vranos’s Ellington.

How are insiders trading POZEN Inc. (NASDAQ:POZN)?

Bullish insider trading is particularly usable when the company we’re looking at has seen transactions within the past half-year. Over the last 180-day time period, POZEN Inc. (NASDAQ:POZN) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to POZEN Inc. (NASDAQ:POZN). These stocks are Gentium S.p.A. (ADR) (NASDAQ:GENT), DUSA Pharmaceuticals Inc (NASDAQ:DUSA), MEI Pharma Inc (NASDAQ:MEIP), DURECT Corporation (NASDAQ:DRRX), and Pernix Therapeutics Holdings Inc (NASDAQ:PTX). This group of stocks are in the drug manufacturers – other industry and their market caps are closest to POZN’s market cap.

With the results exhibited by our time-tested strategies, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and POZEN Inc. (NASDAQ:POZN) shareholders fit into this picture quite nicely.

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