Alkermes Plc (ALKS): Are Hedge Funds Right About This Stock?

We at Insider Monkey have gone over 742 13F filings that hedge funds and prominent investors are required to file by the government. The 13F filings show the funds’ and investors’ portfolio positions as of September 30. In this article, we look at what those funds think of Alkermes Plc (NASDAQ:ALKS) based on that data.

Alkermes Plc (NASDAQ:ALKS) was in 22 hedge funds’ portfolios at the end of the third quarter of 2016. ALKS shareholders have witnessed a decrease in enthusiasm from smart money of late. There were 25 hedge funds in our database with ALKS holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as IDEX Corporation (NYSE:IEX), Trimble Navigation Limited (NASDAQ:TRMB), and The Middleby Corporation (NASDAQ:MIDD) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

How are hedge funds trading Alkermes Plc (NASDAQ:ALKS)?

At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, down by 12% from the second quarter of 2016. By comparison, 34 hedge funds held shares or bullish call options in ALKS heading into this year. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Neil Woodford’s Woodford Investment Management has the biggest position in Alkermes Plc (NASDAQ:ALKS), worth close to $355 million, corresponding to 14.4% of its total 13F portfolio. Coming in second is D E Shaw, which holds a $78.3 million position. Some other peers that hold long positions encompass Stephen DuBois’ Camber Capital Management, and Phill Gross and Robert Atchinson’s Adage Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Because Alkermes Plc (NASDAQ:ALKS) has faced declining sentiment from hedge fund managers, logic holds that there were a few money managers that decided to sell off their entire stakes by the end of the third quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group got rid of the biggest stake of the 700 funds tracked by Insider Monkey, comprising an estimated $37.9 million in stock. Samuel Isaly’s fund, OrbiMed Advisors, also cut its stock, about $7.4 million worth.

Let’s check out hedge fund activity in other stocks similar to Alkermes Plc (NASDAQ:ALKS). We will take a look at IDEX Corporation (NYSE:IEX), Trimble Navigation Limited (NASDAQ:TRMB), The Middleby Corporation (NASDAQ:MIDD), and Mid America Apartment Communities Inc (NYSE:MAA). All of these stocks’ market caps resemble ALKS’s market cap.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $317 million. That figure was $606 million in ALKS’s case. The Middleby Corporation (NASDAQ:MIDD) is the most popular stock in this table. On the other hand Mid America Apartment Communities Inc (NYSE:MAA) is the least popular one with only 15 bullish hedge fund positions. Alkermes Plc (NASDAQ:ALKS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MIDD might be a better candidate to consider taking a long position in.

Disclosure: None