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ACADIA Pharmaceuticals Inc. (ACAD): Insiders Are Dumping, Should You?

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ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) was in 12 hedge funds’ portfolio at the end of the fourth quarter of 2012. ACAD has experienced an increase in support from the world’s most elite money managers of late. There were 9 hedge funds in our database with ACAD holdings at the end of the previous quarter.

ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD)

To most investors, hedge funds are viewed as worthless, old financial tools of yesteryear. While there are over 8000 funds trading at the moment, we at Insider Monkey look at the elite of this group, around 450 funds. Most estimates calculate that this group has its hands on most of the hedge fund industry’s total asset base, and by keeping an eye on their highest performing investments, we have discovered a few investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 24 percentage points in 7 months (see the details here).

Equally as integral, optimistic insider trading activity is another way to parse down the stock market universe. As the old adage goes: there are plenty of incentives for a corporate insider to cut shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the market-beating potential of this method if piggybackers know what to do (learn more here).

Consequently, let’s take a peek at the recent action regarding ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD).

What does the smart money think about ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD)?

At the end of the fourth quarter, a total of 12 of the hedge funds we track held long positions in this stock, a change of 33% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially.

Of the funds we track, Julian Baker and Felix Baker’s Baker Bros. Advisors had the most valuable position in ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), worth close to $72.6 million, comprising 1.9% of its total 13F portfolio. The second largest stake is held by RA Capital Management, managed by Peter Kolchinsky, which held a $34.1 million position; 12% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include Jacob Gottlieb’s Visium Asset Management, Samuel Isaly’s OrbiMed Advisors and Peter Kolchinsky’s RA Capital Management.

Now, specific money managers were breaking ground themselves. OrbiMed Advisors, managed by Samuel Isaly, established the biggest position in ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD). OrbiMed Advisors had 5.2 million invested in the company at the end of the quarter. Peter Kolchinsky’s RA Capital Management also made a $3.5 million investment in the stock during the quarter. The other funds with brand new ACAD positions are Joseph Edelman’s Perceptive Advisors, Cliff Asness’s AQR Capital Management, and Glenn Russell Dubin’s Highbridge Capital Management.

Insider trading activity in ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD)

Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has experienced transactions within the past six months. Over the last 180-day time period, ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) has experienced zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD). These stocks are Array Biopharma Inc (NASDAQ:ARRY), Cadence Pharmaceuticals, Inc. (NASDAQ:CADX), Merrimack Pharmaceuticals Inc (NASDAQ:MACK), Halozyme Therapeutics, Inc. (NASDAQ:HALO), and EXACT Sciences Corporation (NASDAQ:EXAS). This group of stocks are in the biotechnology industry and their market caps resemble ACAD’s market cap.

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