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Cytokinetics, Inc. (CYTK): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

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Cytokinetics, Inc. (NASDAQ:CYTK) was in 8 hedge funds’ portfolio at the end of March. CYTK shareholders have witnessed an increase in support from the world’s most elite money managers of late. There were 7 hedge funds in our database with CYTK positions at the end of the previous quarter.

Cytokinetics, Inc. (NASDAQ:CYTK)

According to most stock holders, hedge funds are viewed as slow, old financial vehicles of years past. While there are over 8000 funds trading at present, we choose to focus on the bigwigs of this group, about 450 funds. Most estimates calculate that this group controls the majority of all hedge funds’ total asset base, and by monitoring their top equity investments, we have determined a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as integral, positive insider trading activity is another way to parse down the investments you’re interested in. Obviously, there are lots of reasons for a bullish insider to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this tactic if piggybackers know where to look (learn more here).

Consequently, we’re going to take a peek at the recent action regarding Cytokinetics, Inc. (NASDAQ:CYTK).

Hedge fund activity in Cytokinetics, Inc. (NASDAQ:CYTK)

In preparation for this quarter, a total of 8 of the hedge funds we track held long positions in this stock, a change of 14% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings meaningfully.

Of the funds we track, James E. Flynn’s Deerfield Management had the most valuable position in Cytokinetics, Inc. (NASDAQ:CYTK), worth close to $14.7 million, comprising 0.9% of its total 13F portfolio. Coming in second is Lansdowne Partners, managed by Paul Ruddock and Steve Heinz, which held a $11.9 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include William Leland Edwards’s Palo Alto Investors, Anand Parekh’s Alyeska Investment Group and Anand Parekh’s Alyeska Investment Group.

As aggregate interest increased, some big names were breaking ground themselves. LMR Partners, managed by Ben Levine Andrew Manuel and Stefan Renold, established the biggest position in Cytokinetics, Inc. (NASDAQ:CYTK). LMR Partners had 0.1 million invested in the company at the end of the quarter.

How are insiders trading Cytokinetics, Inc. (NASDAQ:CYTK)?

Insider purchases made by high-level executives is best served when the company in question has seen transactions within the past six months. Over the last 180-day time period, Cytokinetics, Inc. (NASDAQ:CYTK) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Cytokinetics, Inc. (NASDAQ:CYTK). These stocks are ShangPharma Corp (ADR) (NYSE:SHP), ArQule, Inc. (NASDAQ:ARQL), OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI), Enzon Pharmaceuticals, Inc. (NASDAQ:ENZN), and Durata Therapeutics Inc (NASDAQ:DRTX). This group of stocks are the members of the biotechnology industry and their market caps are closest to CYTK’s market cap.

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