Is Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) a safe stock to buy now? Hedge funds are turning bullish. The number of long hedge fund bets increased by 2 lately.
In the financial world, there are tons of indicators investors can use to watch their holdings. Some of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best fund managers can outperform the market by a very impressive margin (see just how much).
Just as integral, bullish insider trading sentiment is a second way to parse down the investments you're interested in. There are lots of motivations for an upper level exec to sell shares of his or her company, but just one, very simple reason why they would buy. Several academic studies have demonstrated the valuable potential of this method if "monkeys" know where to look (learn more here).
Keeping this in mind, it's important to take a glance at the key action encompassing Arena Pharmaceuticals, Inc. (NASDAQ:ARNA).
At the end of the first quarter, a total of 13 of the hedge funds we track were long in this stock, a change of 18% from the first quarter. With the smart money's sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings significantly.
When looking at the hedgies we track, James E. Flynn's Deerfield Management had the largest position in Arena Pharmaceuticals, Inc. (NASDAQ:ARNA), worth close to $43.9 million, accounting for 2.6% of its total 13F portfolio. Sitting at the No. 2 spot is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $7.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers with similar optimism include Daniel Gold's QVT Financial, and Robert Pohly's Samlyn Capital.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most outsized position in Arena Pharmaceuticals, Inc. (NASDAQ:ARNA). Arrowstreet Capital had 7.7 million invested in the company at the end of the quarter. Robert Pohly's Samlyn Capital also made a $3.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Daniel S. Och's OZ Management and Gabe Hoffman's Accipiter Capital Management.
Insider trading activity, especially when it's bullish, is particularly usable when the company in focus has experienced transactions within the past half-year. Over the latest 180-day time frame, Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
With the results shown by Insider Monkey's tactics, everyday investors must always pay attention to hedge fund and insider trading sentiment, and Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) applies perfectly to this mantra.