What Hedge Funds Think About Vertex Pharmaceuticals Incorporated (VRTX)

Is Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) a buy?

In the 21st century investor’s toolkit, there are tons of metrics market participants can use to track the equity markets. 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 elite fund managers can beat the market by a very impressive amount (see just how much).

Equally as useful, positive insider trading activity is another way to look at the world of equities. Obviously, there are a variety of reasons for an executive to cut shares of his or her company, but only one, very obvious reason why they would buy. Many empirical studies have demonstrated the market-beating potential of this method if investors know what to do (learn more here).

Thus, let’s analyze the latest info surrounding Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX).

How are hedge funds trading Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)?

Heading into Q3, a total of 24 of the hedge funds we track were bullish in this stock, a change of 9% from one quarter earlier. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes significantly.

According to our 13F database, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the biggest position in Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX). Adage Capital Management has a $245.9 million position in the stock, comprising 0.8% of its 13F portfolio. The second largest stake is held by Jerome Pfund and Michael Sjostrom of Sectoral Asset Management, with a $202.2 million position; the fund has 6% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Arthur B Cohen and Joseph Healey’s Healthcor Management LP, Steven Cohen’s SAC Capital Advisors and Donald Chiboucis’s Columbus Circle Investors.

Consequently, particular hedge funds were leading the bulls’ herd. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the most valuable position in Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX). Adage Capital Management had 245.9 million invested in the company at the end of the quarter. Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management also initiated a $202.2 million position during the quarter. The other funds with brand new VRTX positions are Arthur B Cohen and Joseph Healey’s Healthcor Management LP, Steven Cohen’s SAC Capital Advisors, and Donald Chiboucis’s Columbus Circle Investors.

How have insiders been trading Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)?

Legal insider trading, particularly when it’s bullish, is best served when the company we’re looking at has experienced transactions within the past six months. Over the last six-month time frame, Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) has experienced zero unique insiders purchasing, and 12 insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX). These stocks are Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX), Illumina, Inc. (NASDAQ:ILMN), BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), and Regeneron Pharmaceuticals Inc (NASDAQ:REGN). This group of stocks are the members of the biotechnology industry and their market caps resemble VRTX’s market cap.