If you were to ask many traders, hedge funds are viewed as useless, outdated financial tools of a forgotten age. Although there are more than 8,000 hedge funds trading in present day, this site looks at the top tier of this group, close to 525 funds. It is assumed that this group has its hands on the majority of the hedge fund industry's total assets, and by paying attention to their highest quality investments, we've determined a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a 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 outpaced the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Equally as useful, bullish insider trading sentiment is a second way to analyze the marketplace. As the old adage goes: there are lots of stimuli for an executive to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Several academic studies have demonstrated the market-beating potential of this strategy if piggybackers know what to do (learn more here).
Keeping this in mind, let's discuss the latest info about United Therapeutics Corporation (NASDAQ:UTHR).
In preparation for the third quarter, a total of 16 of the hedge funds we track held long positions in this stock, a change of 23% from the first quarter. With hedgies' capital changing hands, there exists an "upper tier" of key hedge fund managers who were boosting their holdings significantly.
Out of the hedge funds we follow, William Leland Edwards's Palo Alto Investors had the largest position in United Therapeutics Corporation (NASDAQ:UTHR), worth close to $59.3 million, comprising 7% of its total 13F portfolio. Sitting at the No. 2 spot is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $44.2 million position; 0.3% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism include Jim Simons's Renaissance Technologies, Joel Greenblatt's Gotham Asset Management and Jerome Pfund and Michael Sjostrom's Sectoral Asset Management.
Consequently, specific money managers have jumped into United Therapeutics Corporation (NASDAQ:UTHR) headfirst. Palo Alto Investors, managed by William Leland Edwards, created the most valuable position in United Therapeutics Corporation (NASDAQ:UTHR). Palo Alto Investors had 59.3 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $44.2 million position during the quarter. The other funds with new positions in the stock are Jim Simons's Renaissance Technologies, Ken Griffin's Citadel Investment Group, and Joel Greenblatt's Gotham Asset Management.
Bullish insider trading is most useful when the primary stock in question has seen transactions within the past 180 days. Over the latest six-month time frame, United Therapeutics Corporation (NASDAQ:UTHR) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We'll check out the relationship between both of these indicators in other stocks similar to United Therapeutics Corporation (NASDAQ:UTHR). These stocks are The Medicines Company (NASDAQ:MDCO), Taro Pharmaceutical Industries Ltd. (NYSE:TARO), Endo Health Solutions Inc (NASDAQ:ENDP), Warner Chilcott Plc (NASDAQ:WCRX), and Cubist Pharmaceuticals Inc (NASDAQ:CBST). This group of stocks belong to the drug manufacturers - other industry and their market caps match UTHR's market cap.