Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) investors should pay attention to an increase in hedge fund interest in recent months.
To most stock holders, hedge funds are seen as underperforming, old financial tools of years past. While there are greater than 8000 funds trading at present, we at Insider Monkey look at the moguls of this group, about 450 funds. Most estimates calculate that this group controls the lion's share of the hedge fund industry's total asset base, and by tracking their highest performing picks, we have uncovered a number of investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Equally as key, optimistic insider trading sentiment is another way to parse down the investments you're interested in. Just as you'd expect, there are many incentives for an executive to downsize shares of his or her company, but just one, very simple reason why they would behave bullishly. Many empirical studies have demonstrated the valuable potential of this tactic if investors understand what to do (learn more here).
With these "truths" under our belt, it's important to take a look at the latest action surrounding Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN).
In preparation for this quarter, a total of 25 of the hedge funds we track were long in this stock, a change of 47% from the previous quarter. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings significantly.
Of the funds we track, Daniel Gold's QVT Financial had the most valuable position in Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN), worth close to $93.6 million, comprising 6.2% of its total 13F portfolio. Sitting at the No. 2 spot is Peter Kolchinsky of RA Capital Management, with a $27.7 million position; 5.9% of its 13F portfolio is allocated to the company. Some other peers with similar optimism include James E. Flynn's Deerfield Management, Phill Gross and Robert Atchinson's Adage Capital Management and Jerome Pfund and Michael Sjostrom's Sectoral Asset Management.
As one would reasonably expect, specific money managers have been driving this bullishness. Sectoral Asset Management, managed by Jerome Pfund and Michael Sjostrom, assembled the most valuable position in Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN). Sectoral Asset Management had 10.3 million invested in the company at the end of the quarter. Julian Baker and Felix Baker's Baker Bros. Advisors also made a $4 million investment in the stock during the quarter. The other funds with brand new ACHN positions are Anand Parekh's Alyeska Investment Group, Jeffrey Vinik's Vinik Asset Management, and Charles Davidson's Wexford Capital.
Insider trading activity, especially when it's bullish, is most useful when the company we're looking at has experienced transactions within the past half-year. Over the last half-year time frame, Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).
With the results demonstrated by our studies, everyday investors should always monitor hedge fund and insider trading activity, and Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) is no exception.