SciClone Pharmaceuticals Inc (NASDAQ:SCLN) is a $503.65 million market cap company which serves as a provider of therapies for oncology, infectious diseases and cardiovascular disorders in China, Hong Kong and the US. So far this year, the stock of the company has appreciated by a stout 28.20%, while during today’s trading session alone the shares have gained over 14.50%, as they are changing hands like a hot potato. The large increase in trading volume and bullish charge of the shares seems to largely be based on a bullish call from an analyst. Yesterday, analysts at MLV & Co initiated coverage on the stock with a ‘Buy’ rating and a $15 target, which suggested potential upside of well over 60% at that time. Since there was no other major news announced over the past two days that could have triggered such a jump, let’s briefly describe the recent performance of the company as well as the activity of insiders and hedge fund managers. In the company’s last earnings report, SciClone Pharmaceuticals Inc (NASDAQ:SCLN) surprised investors with 26.4% year-over-year revenue growth versus the 1.9% industry average. The EPS growth was even more striking, a 112.5% increase from the previous year’s quarter. The company is financially sound, having no debt and a quick ratio of 6.82.
SciClone Pharmaceuticals Inc (NASDAQ:SCLN) investors should pay attention to an increase in enthusiasm from smart money of late. The company was in 16 hedge funds’ portfolios, with their holdings totaling $40.08 million in value at the end of March, while there were 15 hedge funds in our database holding around $33.40 million of the stock at the end of the previous quarter.
We don’t just track the latest moves of hedge funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research which showed that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests, and easily beating the most popular large-cap picks of funds, which nonetheless get the majority of their collective capital. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic only the very best ideas of the best fund managers on your own? Since the beginning of forward testing in August 2012, the Insider Monkey small-cap strategy has outperformed the market every year, returning 142%, nearly 2.5 times greater returns than the S&P 500 during the same period (see more details).
At the moment there are tons of signals market participants use to assess their stock investments. A pair of the best signals are hedge fund and insider trading activity. Experts at Insider Monkey, a website specializing in hedge funds, have shown that, historically, those who follow the best picks of the top money managers can outpace their index-focused peers by a solid amount (see the details here). In terms of insider activity, according to a Form 4 filing on June 29, the top executives own 0.6% of shares of the company. During the last three months alone, there were 262,140 shares offloaded, with Friedhelm Blobel, the CEO, heading the list of sellers with around 120,000 shares sold.
Let’s next take a look at the detailed hedge fund activity in SciClone Pharmaceuticals.
What have hedge funds been doing with SciClone Pharmaceuticals Inc (NASDAQ:SCLN)?
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the fourth quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably.
When looking at the hedgies followed by Insider Monkey, Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, holds the most valuable position in SciClone Pharmaceuticals Inc (NASDAQ:SCLN). Nantahala Capital Management has a $13.5 million position in the stock, comprising 2.2% of its 13F portfolio. Coming in second is Robert B. Gillam of McKinley Capital Management, with a $4.8 million position; 0.2% of his fund’s 13F portfolio is allocated to the company. Other peers with similar optimism contain Israel Englander’s Millennium Management, Jim Simons’ Renaissance Technologies, and Peter Muller’s PDT Partners.
As one would reasonably expect, some big names have been driving this bullishness. Hutchin Hill Capital, managed by Neil Chriss, created the most outsized position in SciClone Pharmaceuticals Inc (NASDAQ:SCLN). Hutchin Hill Capital had $629,000 invested in the company at the end of the quarter. Jacob Gottlieb‘s Visium Asset Management also initiated a $156,000 position during the quarter. The only other fund with a new position in the stock is Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
In general, the shares of SciClone Pharmaceuticals Inc (NASDAQ:SCLN) look very attractive from a hedge fund sentiment perspective. The stock of the company is fundamentally sound and appreciated by industry analysts. Therefore, we recommend buying the shares until they reach the $15 target.
Disclosure: None
