Where Do Hedge Funds Stand On Aerie Pharmaceuticals Inc (AERI)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Aerie Pharmaceuticals Inc (NASDAQ:AERI) based on that data.

Aerie Pharmaceuticals Inc (NASDAQ:AERI) has experienced a decrease in hedge fund sentiment of late. Aerie Pharmaceuticals Inc (NASDAQ:AERI) was in 20 hedge funds’ portfolios at the end of June. The all time high for this statistic is 31. There were 21 hedge funds in our database with AERI holdings at the end of March. Our calculations also showed that AERI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In today’s marketplace there are a lot of metrics shareholders have at their disposal to assess publicly traded companies. Some of the most underrated metrics are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outperform the market by a superb margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

John Levin of Levin Capital Strategies

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this under-the-radar stock. We go through lists like the 10 best growth stocks to buy to pick the next Tesla that will deliver a 10x return. 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. With all of this in mind we’re going to go over the key hedge fund action regarding Aerie Pharmaceuticals Inc (NASDAQ:AERI).

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

At the end of June, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards AERI over the last 24 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Partner Fund Management, managed by Christopher James, holds the most valuable position in Aerie Pharmaceuticals Inc (NASDAQ:AERI). Partner Fund Management has a $34.9 million position in the stock, comprising 1.1% of its 13F portfolio. Coming in second is Levin Capital Strategies, managed by John A. Levin, which holds a $21.6 million position; 2.2% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors with similar optimism consist of James E. Flynn’s Deerfield Management, Bhagwan Jay Rao’s Integral Health Asset Management and Henrik Rhenman’s Rhenman & Partners Asset Management. In terms of the portfolio weights assigned to each position Levin Capital Strategies allocated the biggest weight to Aerie Pharmaceuticals Inc (NASDAQ:AERI), around 2.21% of its 13F portfolio. Integral Health Asset Management is also relatively very bullish on the stock, designating 1.9 percent of its 13F equity portfolio to AERI.

Since Aerie Pharmaceuticals Inc (NASDAQ:AERI) has faced bearish sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of hedgies who were dropping their entire stakes last quarter. It’s worth mentioning that Ken Griffin’s Citadel Investment Group sold off the largest stake of all the hedgies tracked by Insider Monkey, comprising an estimated $9.3 million in stock. David Rosen’s fund, Rubric Capital Management, also cut its stock, about $8.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 1 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Aerie Pharmaceuticals Inc (NASDAQ:AERI) but similarly valued. These stocks are Conn’s, Inc. (NASDAQ:CONN), Ardelyx Inc (NASDAQ:ARDX), Kopin Corporation (NASDAQ:KOPN), Chuy’s Holdings Inc (NASDAQ:CHUY), Fossil Group Inc (NASDAQ:FOSL), Great Southern Bancorp, Inc. (NASDAQ:GSBC), and Asensus Surgical, Inc. (NYSE:ASXC). This group of stocks’ market caps resemble AERI’s market cap.

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As you can see these stocks had an average of 12.1 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $136 million in AERI’s case. Ardelyx Inc (NASDAQ:ARDX) is the most popular stock in this table. On the other hand Asensus Surgical, Inc. (NYSE:ASXC) is the least popular one with only 6 bullish hedge fund positions. Aerie Pharmaceuticals Inc (NASDAQ:AERI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AERI is 73.4. 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately AERI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AERI were disappointed as the stock returned -33.9% since the end of June (through 10/22) 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.