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Cubist Pharmaceuticals Inc (CBST): Hedge Funds Are Bullish and Insiders Are Undecided, What Should You Do?

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If you were to ask many of your fellow readers, hedge funds are assumed to be overrated, outdated financial tools of an era lost to time. Although there are In excess of 8,000 hedge funds trading today, this site aim at the leaders of this club, around 525 funds. Analysts calculate that this group controls the lion’s share of the hedge fund industry’s total capital, and by keeping an eye on their highest performing picks, we’ve discovered a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outperformed 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 beaten the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Equally as necessary, bullish insider trading activity is a second way to look at the marketplace. As the old adage goes: there are a number of incentives for a corporate insider to sell shares of his or her company, but just one, very simple reason why they would behave bullishly. Plenty of empirical studies have demonstrated the impressive potential of this tactic if you understand what to do (learn more here).

What’s more, let’s discuss the recent info about Cubist Pharmaceuticals Inc (NASDAQ:CBST).

How are hedge funds trading Cubist Pharmaceuticals Inc (NASDAQ:CBST)?

At the end of the second quarter, a total of 24 of the hedge funds we track were bullish in this stock, a change of 9% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably.

Cubist Pharmaceuticals Inc (NASDAQ:CBST)When using filings from the hedgies we track, Deerfield Management, managed by James E. Flynn, holds the most valuable position in Cubist Pharmaceuticals Inc (NASDAQ:CBST). Deerfield Management has a $72.4 million call position in the stock, comprising 3.4% of its 13F portfolio. Coming in second is Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, which held a $57.9 million position; the fund has 3.5% of its 13F portfolio invested in the stock. Some other hedge funds that hold long positions include Sean Cullinan’s Point State Capital, William Leland Edwards’s Palo Alto Investors and Israel Englander’s Millennium Management.

With a general bullishness amongst the titans, specific money managers have been driving this bullishness. Deerfield Management, managed by James E. Flynn, established the largest call position in Cubist Pharmaceuticals Inc (NASDAQ:CBST). Deerfield Management had 72.4 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $65 million investment in the stock during the quarter. The other funds with new positions in the stock are Arthur B Cohen and Joseph Healey’s Healthcor Management LP, Sean Cullinan’s Point State Capital, and William Leland Edwards’s Palo Alto Investors.

What have insiders been doing with Cubist Pharmaceuticals Inc (NASDAQ:CBST)?

Insider buying is at its handiest when the company we’re looking at has experienced transactions within the past half-year. Over the latest 180-day time frame, Cubist Pharmaceuticals Inc (NASDAQ:CBST) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Cubist Pharmaceuticals Inc (NASDAQ:CBST). These stocks are The Medicines Company (NASDAQ:MDCO), Taro Pharmaceutical Industries Ltd. (NYSE:TARO), Endo Health Solutions Inc (NASDAQ:ENDP), Warner Chilcott Plc (NASDAQ:WCRX), and United Therapeutics Corporation (NASDAQ:UTHR). All of these stocks are in the drug manufacturers – other industry and their market caps match CBST’s market cap.

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