Is Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) a healthy stock for your portfolio? Money managers are reducing their bets on the stock. The number of bullish hedge fund positions dropped by 2 in recent months.
In the 21st century investor’s toolkit, there are plenty of gauges shareholders can use to watch the equity markets. A couple of the best are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite fund managers can outpace the S&P 500 by a superb margin (see just how much).
Just as important, positive insider trading activity is another way to parse down the investments you're interested in. Just as you'd expect, there are plenty of stimuli for a bullish insider to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Several empirical studies have demonstrated the impressive potential of this method if piggybackers understand where to look (learn more here).
With these "truths" under our belt, it's important to take a glance at the latest action encompassing Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA).
At year's end, a total of 19 of the hedge funds we track held long positions in this stock, a change of -10% from the third quarter. With hedge funds' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes meaningfully.
According to our comprehensive database, Sectoral Asset Management, managed by Jérôme Pfund and Michael Sjöström, holds the largest position in Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA). Sectoral Asset Management has a $77 million position in the stock, comprising 2.7% of its 13F portfolio. On Sectoral Asset Management's heels is Third Point, managed by Dan Loeb, which held a $48 million position; 0.2% of its 13F portfolio is allocated to the company. Some other hedgies that are bullish include Julian Baker and Felix Baker's Baker Bros. Advisors, Steven Cohen's SAC Capital Advisors and Phill Gross and Robert Atchinson's Adage Capital Management.
Since Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) has experienced declining sentiment from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of hedgies that decided to sell off their full holdings heading into 2013. It's worth mentioning that Andreas Halvorsen's Viking Global cut the largest investment of the "upper crust" of funds we key on, valued at about $47 million in stock., and Wayne Holman of Ridgeback Capital Management was right behind this move, as the fund cut about $24 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 2 funds heading into 2013.
Insider purchases made by high-level executives is best served when the primary stock in question has seen transactions within the past half-year. Over the last six-month time frame, Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) has experienced zero unique insiders buying, and 8 insider sales (see the details of insider trades here).
With the results demonstrated by Insider Monkey's research, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) applies perfectly to this mantra.
Insider Monkey's small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.