Hedge Funds Are Selling Keryx Biopharmaceuticals (KERX)

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last four quarters ending in October and sixty three percent of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Keryx Biopharmaceuticals (NASDAQ:KERX) from the perspective of those elite funds.

Is Keryx Biopharmaceuticals (NASDAQ:KERX) ready to rally soon? The best stock pickers are in a bearish mood. The number of bullish hedge fund bets went down by 2 in recent months. KERX was in 16 hedge funds’ portfolios at the end of September. There were 18 hedge funds in our database with KERX positions at the end of the previous quarter. At the end of this article we will also compare KERX to other stocks, including Mistras Group, Inc. (NYSE:MG), Omega Protein Corporation (NYSE:OME), and THL Credit, Inc. (NASDAQ:TCRD) to get a better sense of its popularity.

Today there are a large number of methods that stock market investors have at their disposal to evaluate their holdings. A couple of the less utilized methods are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top fund managers can trounce the market by a very impressive margin (see the details here).

Now, we’re going to take a look at the latest action regarding Keryx Biopharmaceuticals (NASDAQ:KERX).

How are hedge funds trading Keryx Biopharmaceuticals (NASDAQ:KERX)?

At the Q3’s end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, down by 11% from the second quarter. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Baupost Group, managed by Seth Klarman, holds the biggest position in Keryx Biopharmaceuticals (NASDAQ:KERX). At the end of the quarter, the fund reportedly had a $84.5 million position in the stock, comprising 1.4% of its 13F portfolio. Coming in second is Abrams Capital Management, managed by David Abrams, which holds a $17.6 million position; 1.3% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism encompass Charles Clough’s Clough Capital Partners, Matthew Sidman’s Three Bays Capital and Matt Sirovich and Jeremy Mindich’s Scopia Capital.

Seeing as Keryx Biopharmaceuticals (NASDAQ:KERX) has faced bearish sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few funds that decided to sell off their entire stakes by the end of the third quarter. At the top of the heap, Herb Wagner’s FinePoint Capital dropped the largest stake of the 700 funds monitored by Insider Monkey, totaling an estimated $16 million in stock, and Bihua Chen’s Cormorant Asset Management was right behind this move, as the fund dumped about $8.2 million worth of shares. These moves are interesting, as aggregate hedge fund interest dropped by 2 funds by the end of the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Keryx Biopharmaceuticals (NASDAQ:KERX) but similarly valued. We will take a look at Mistras Group, Inc. (NYSE:MG), Omega Protein Corporation (NYSE:OME), THL Credit, Inc. (NASDAQ:TCRD), and Corindus Vascular Robotics Inc (NYSEMKT:CVRS). All of these stocks’ market caps resemble KERX’s market cap.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. KERX was miles ahead, having attracted some $123 million in hedge funds’ investments. Mistras Group, Inc. (NYSE:MG) is the most popular stock in this table, while Corindus Vascular Robotics Inc (NYSEMKT:CVRS) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Keryx Biopharmaceuticals (NASDAQ:KERX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.