Is Enzon Pharmaceuticals, Inc. (NASDAQ:ENZN) a buy, sell, or hold? The best stock pickers are taking a bearish view. The number of long hedge fund positions dropped by 4 lately.
If you’d ask most traders, hedge funds are seen as unimportant, old financial tools of yesteryear. While there are greater than 8000 funds trading at present, we look at the top tier of this club, about 450 funds. It is widely believed that this group oversees the majority of the smart money’s total asset base, and by tracking their top picks, we have come up with a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum 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 trumped the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Just as key, optimistic insider trading sentiment is a second way to parse down the stock market universe. There are plenty of reasons for an upper level exec to downsize shares of his or her company, but only one, very simple reason why they would buy. Many academic studies have demonstrated the valuable potential of this tactic if investors understand what to do (learn more here).
Keeping this in mind, let’s take a peek at the recent action encompassing Enzon Pharmaceuticals, Inc. (NASDAQ:ENZN).
How have hedgies been trading Enzon Pharmaceuticals, Inc. (NASDAQ:ENZN)?
At the end of the fourth quarter, a total of 10 of the hedge funds we track were bullish in this stock, a change of -29% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully.
Of the funds we track, Seth Klarman’s Baupost Group had the most valuable position in Enzon Pharmaceuticals, Inc. (NASDAQ:ENZN), worth close to $34.8 million, comprising 1.1% of its total 13F portfolio. Sitting at the No. 2 spot is Carl Icahn of Icahn Capital LP, with a $26.2 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other hedgies that are bullish include Jim Simons’s Renaissance Technologies, Michael Price’s MFP Investors and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Judging by the fact that Enzon Pharmaceuticals, Inc. (NASDAQ:ENZN) has faced falling interest from the smart money, logic holds that there was a specific group of funds who sold off their full holdings in Q4. Interestingly, David Cohen and Harold Levy’s Iridian Asset Management dropped the largest stake of the 450+ funds we monitor, totaling about $9.8 million in stock.. Jean-Marie Eveillard’s fund, First Eagle Investment Management, also sold off its stock, about $3.4 million worth. These moves are interesting, as total hedge fund interest dropped by 4 funds in Q4.
What have insiders been doing with Enzon Pharmaceuticals, Inc. (NASDAQ:ENZN)?
Bullish insider trading is most useful when the primary stock in question has seen transactions within the past six months. Over the latest 180-day time frame, Enzon Pharmaceuticals, Inc. (NASDAQ:ENZN) has seen zero unique insiders purchasing, 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 Enzon Pharmaceuticals, Inc. (NASDAQ:ENZN). These stocks are Cempra Inc (NASDAQ:CEMP), Cytokinetics, Inc. (NASDAQ:CYTK), ShangPharma Corp (ADR) (NYSE:SHP), Durata Therapeutics Inc (NASDAQ:DRTX), and OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI). This group of stocks are the members of the biotechnology industry and their market caps are closest to ENZN’s market cap.