In this article we will take a look at whether hedge funds think Supernus Pharmaceuticals Inc (NASDAQ:SUPN) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Supernus Pharmaceuticals Inc (NASDAQ:SUPN) has seen an increase in enthusiasm from smart money recently. Our calculations also showed that SUPN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 S&P 500 ETFs by 58 percentage points since March 2017 (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.
Michael Castor of Sio Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a peek at the fresh hedge fund action surrounding Supernus Pharmaceuticals Inc (NASDAQ:SUPN).
How have hedgies been trading Supernus Pharmaceuticals Inc (NASDAQ:SUPN)?
At the end of the first quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the fourth quarter of 2019. On the other hand, there were a total of 22 hedge funds with a bullish position in SUPN a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Steven Boyd’s Armistice Capital has the largest position in Supernus Pharmaceuticals Inc (NASDAQ:SUPN), worth close to $54 million, corresponding to 3.3% of its total 13F portfolio. Sitting at the No. 2 of Renaissance Technologies, with a $16.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions consist of Ken Griffin’s Citadel Investment Group, John Overdeck and David Siegel’s Two Sigma Advisors and David Harding’s Winton Capital Management. In terms of the portfolio weights assigned to each position Armistice Capital allocated the biggest weight to Supernus Pharmaceuticals Inc (NASDAQ:SUPN), around 3.34% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, designating 0.66 percent of its 13F equity portfolio to SUPN.
Now, key money managers have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, created the most valuable position in Supernus Pharmaceuticals Inc (NASDAQ:SUPN). Point72 Asset Management had $6.2 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley’s Polar Capital also made a $6 million investment in the stock during the quarter. The other funds with new positions in the stock are Cliff Asness’s AQR Capital Management, Hoon Kim’s Quantinno Capital, and Michael Castor’s Sio Capital.
Let’s now review hedge fund activity in other stocks similar to Supernus Pharmaceuticals Inc (NASDAQ:SUPN). We will take a look at Canadian Solar Inc. (NASDAQ:CSIQ), Seacoast Banking Corporation of Florida (NASDAQ:SBCF), Glu Mobile Inc. (NASDAQ:GLUU), and Cardtronics plc (NASDAQ:CATM). This group of stocks’ market valuations match SUPN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CSIQ | 11 | 86580 | -3 |
| SBCF | 8 | 11443 | 0 |
| GLUU | 18 | 113910 | -2 |
| CATM | 17 | 246532 | -5 |
| Average | 13.5 | 114616 | -2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $115 million. That figure was $131 million in SUPN’s case. Glu Mobile Inc. (NASDAQ:GLUU) is the most popular stock in this table. On the other hand Seacoast Banking Corporation of Florida (NASDAQ:SBCF) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Supernus Pharmaceuticals Inc (NASDAQ:SUPN) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on SUPN as the stock returned 31.6% so far in Q2 (through June 10th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
