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Do Hedge Funds and Insiders Love Akorn, Inc. (AKRX)?

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Is Akorn, Inc. (NASDAQ:AKRX) a buy?

To many of your peers, hedge funds are viewed as useless, old investment tools of an era lost to time. Although there are In excess of 8,000 hedge funds trading currently, this site aim at the aristocrats of this group, around 525 funds. It is widely held that this group controls most of all hedge funds’ total capital, and by keeping an eye on their best investments, we’ve figured out a number of investment strategies that have historically outperformed 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 started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

Just as useful, bullish insider trading sentiment is another way to analyze the investments you’re interested in. There are a variety of incentives for an upper level exec to downsize shares of his or her company, but only one, very simple reason why they would behave bullishly. Several empirical studies have demonstrated the valuable potential of this strategy if investors know what to do (learn more here).

What’s more, let’s examine the newest info about Akorn, Inc. (NASDAQ:AKRX).

Hedge fund activity in Akorn, Inc. (NASDAQ:AKRX)

Heading into Q3, a total of 13 of the hedge funds we track held long positions in this stock, a change of 63% from the first quarter. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully.

Akorn, Inc. (NASDAQ:AKRX)Out of the hedge funds we follow, Clough Capital Partners, managed by Charles Clough, holds the most valuable position in Akorn, Inc. (NASDAQ:AKRX). Clough Capital Partners has a $17 million position in the stock, comprising 0.6% of its 13F portfolio. The second largest stake is held by Sectoral Asset Management, managed by Jerome Pfund and Michael Sjostrom, which held a $10.7 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include James Dondero’s Highland Capital Management, Arthur B Cohen and Joseph Healey’s Healthcor Management LP and D. E. Shaw’s D E Shaw.

With a general bullishness amongst the titans, specific money managers have jumped into Akorn, Inc. (NASDAQ:AKRX) headfirst. Citadel Investment Group, managed by Ken Griffin, assembled the largest position in Akorn, Inc. (NASDAQ:AKRX). Citadel Investment Group had 59.8 million invested in the company at the end of the quarter. Charles Clough’s Clough Capital Partners also initiated a $17 million position during the quarter. The other funds with brand new AKRX positions are Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, James Dondero’s Highland Capital Management, and Arthur B Cohen and Joseph Healey’s Healthcor Management LP.

How have insiders been trading Akorn, Inc. (NASDAQ:AKRX)?

Legal insider trading, particularly when it’s bullish, is most useful when the primary stock in question has seen transactions within the past half-year. Over the latest six-month time frame, Akorn, Inc. (NASDAQ:AKRX) has experienced 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 Akorn, Inc. (NASDAQ:AKRX). These stocks are Hi-Tech Pharmacal Co. (NASDAQ:HITK), Sagent Pharmaceuticals Inc (NASDAQ:SGNT), Ligand Pharmaceuticals Inc. (NASDAQ:LGND), Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP), and Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA). This group of stocks are the members of the drugs – generic industry and their market caps are similar to AKRX’s market cap.

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