Were Hedge Funds Right About Antares Pharma Inc (ATRS)?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Antares Pharma Inc (NASDAQ:ATRS).

Is Antares Pharma Inc (NASDAQ:ATRS) a safe investment right now? Money managers were in a bearish mood. The number of long hedge fund bets were cut by 1 lately. Antares Pharma Inc (NASDAQ:ATRS) was in 17 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 20. Our calculations also showed that ATRS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 115 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.

Andre Perold of HighVista Strategies

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a look at the latest hedge fund action surrounding Antares Pharma Inc (NASDAQ:ATRS).

Do Hedge Funds Think ATRS Is A Good Stock To Buy Now?

At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ATRS over the last 23 quarters. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Among these funds, Rubric Capital Management held the most valuable stake in Antares Pharma Inc (NASDAQ:ATRS), which was worth $35.9 million at the end of the fourth quarter. On the second spot was Two Sigma Advisors which amassed $4.9 million worth of shares. Arrowstreet Capital, Venator Capital Management, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Healthcare Value Capital allocated the biggest weight to Antares Pharma Inc (NASDAQ:ATRS), around 4.58% of its 13F portfolio. Rubric Capital Management is also relatively very bullish on the stock, dishing out 2.09 percent of its 13F equity portfolio to ATRS.

Seeing as Antares Pharma Inc (NASDAQ:ATRS) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of fund managers that slashed their positions entirely last quarter. Interestingly, Anders Hallberg and Carl Bennet’s HealthInvest Partners AB dumped the largest position of the “upper crust” of funds tracked by Insider Monkey, totaling about $6.9 million in stock. Steve Cohen’s fund, Point72 Asset Management, also sold off its stock, about $0.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 1 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Antares Pharma Inc (NASDAQ:ATRS) but similarly valued. These stocks are Brookfield Property REIT Inc. (NASDAQ:BPYU), Intersect ENT Inc (NASDAQ:XENT), Calliditas Therapeutics AB (publ) (NASDAQ:CALT), Nabors Industries Ltd. (NYSE:NBR), Watford Holdings Ltd. (NASDAQ:WTRE), CarParts.com, Inc. (NASDAQ:PRTS), and Unitil Corporation (NYSE:UTL). This group of stocks’ market valuations match ATRS’s market valuation.

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As you can see these stocks had an average of 11.9 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $57 million in ATRS’s case. CarParts.com, Inc. (NASDAQ:PRTS) is the most popular stock in this table. On the other hand Brookfield Property REIT Inc. (NASDAQ:BPYU) is the least popular one with only 7 bullish hedge fund positions. Antares Pharma Inc (NASDAQ:ATRS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ATRS is 75. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately ATRS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ATRS were disappointed as the stock returned 5.8% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.