Is it smart to be bullish on Sequenom, Inc. (NASDAQ:SQNM)?
If you were to ask many traders, hedge funds are seen as useless, outdated investment vehicles of a period lost to current times. Although there are over 8,000 hedge funds in operation in present day, this site focuses on the leaders of this group, close to 525 funds. It is widely held that this group has its hands on most of all hedge funds' total capital, and by paying attention to their best stock picks, we've spotted a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a 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 outperformed the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Just as useful, optimistic insider trading sentiment is a second way to analyze the world of equities. As the old adage goes: there are a variety of incentives for an upper level exec to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the impressive potential of this strategy if shareholders understand where to look (learn more here).
What's more, let's analyze the newest info surrounding Sequenom, Inc. (NASDAQ:SQNM).
In preparation for the third quarter, a total of 16 of the hedge funds we track were long in this stock, a change of -6% from one quarter earlier. With hedgies' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings significantly.
When using filings from the hedgies we track, William Leland Edwards's Palo Alto Investors had the biggest position in Sequenom, Inc. (NASDAQ:SQNM), worth close to $34.5 million, comprising 4.1% of its total 13F portfolio. Sitting at the No. 2 spot is SAC Subsidiary of CR Intrinsic Investors, with a $25.6 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Jerome Pfund and Michael Sjostrom's Sectoral Asset Management, Steven Cohen's SAC Capital Advisors and Samuel Isaly's OrbiMed Advisors.
As Sequenom, Inc. (NASDAQ:SQNM) has faced dropping sentiment from the top-tier hedge fund industry, logic holds that there exists a select few fund managers who sold off their full holdings in Q1. At the top of the heap, Peter Kolchinsky's RA Capital Management dumped the biggest position of the "upper crust" of funds we key on, totaling about $14.7 million in stock. Scott Burney's fund, Bluefin Investment Management, also said goodbye to its stock, about $10.1 million worth. These moves are interesting, as aggregate hedge fund interest fell by 1 funds in Q1.
Insider buying made by high-level executives is best served when the company in question has seen transactions within the past half-year. Over the last half-year time frame, Sequenom, Inc. (NASDAQ:SQNM) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We'll go over the relationship between both of these indicators in other stocks similar to Sequenom, Inc. (NASDAQ:SQNM). These stocks are ChemoCentryx Inc (NASDAQ:CCXI), Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI), Hyperion Therapeutics Inc (NASDAQ:HPTX), Emergent Biosolutions Inc (NYSE:EBS), and Idenix Pharmaceuticals Inc (NASDAQ:IDIX). This group of stocks are in the biotechnology industry and their market caps are closest to SQNM's market cap.