Should Depomed Inc (NASDAQ:DEPO) investors track the following data?
In the eyes of many market players, hedge funds are viewed as delayed, outdated financial vehicles of an era lost to time. Although there are more than 8,000 hedge funds with their doors open today, Insider Monkey looks at the upper echelon of this club, about 525 funds. It is assumed that this group controls the lion's share of all hedge funds' total capital, and by monitoring their highest performing picks, we've unearthed a number of investment strategies that have historically beaten the 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 began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Equally as necessary, optimistic insider trading sentiment is another way to analyze the marketplace. Obviously, there are lots of motivations for an executive to cut shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the valuable potential of this tactic if "monkeys" understand where to look (learn more here).
Now that that's out of the way, we're going to examine the recent info about Depomed Inc (NASDAQ:DEPO).
In preparation for the third quarter, a total of 9 of the hedge funds we track were bullish in this stock, a change of -31% from one quarter earlier. With hedge funds' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes considerably.
According to our 13F database, Kevin Kotler's Broadfin Capital had the largest position in Depomed Inc (NASDAQ:DEPO), worth close to $31.6 million, accounting for 6.2% of its total 13F portfolio. Coming in second is Peter S. Park of Park West Asset Management, with a $12.7 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Other hedgies that are bullish include Kevin C. Tang's Tang Capital Management, James E. Flynn's Deerfield Management and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk's GRT Capital Partners.
Judging by the fact that Depomed Inc (NASDAQ:DEPO) has experienced dropping sentiment from upper-tier hedge fund managers, it's easy to see that there was a specific group of funds who were dropping their full holdings in Q1. Intriguingly, Glenn Russell Dubin's Highbridge Capital Management dropped the biggest position of all the hedgies we key on, valued at close to $1.4 million in stock. Israel Englander's fund, Millennium Management, also dropped its stock, about $1.3 million worth. These moves are important to note, as total hedge fund interest fell by 4 funds in Q1.
Legal insider trading, particularly when it's bullish, is particularly usable when the company in focus has experienced transactions within the past 180 days. Over the last six-month time frame, Depomed Inc (NASDAQ:DEPO) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We'll also take a look at the relationship between both of these indicators in other stocks similar to Depomed Inc (NASDAQ:DEPO). These stocks are Synergy Pharmaceuticals Inc (NASDAQ:SGYP), SciClone Pharmaceuticals, Inc. (NASDAQ:SCLN), Dynavax Technologies Corporation (NASDAQ:DVAX), Sucampo Pharmaceuticals, Inc. (NASDAQ:SCMP), and Lannett Company, Inc. (NYSEAMEX:LCI). All of these stocks are in the drug manufacturers - other industry and their market caps are closest to DEPO's market cap.