Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
On the back of disappointing trial results, Tetraphase Pharmaceuticals Inc (NASDAQ:TTPH)’s stock plunged on September 9, which caused many large investors to head for the exits. The stock was in 15 hedge funds’ portfolios at the end of September, compared to 21 hedge funds in our database with TTPH holdings at the end of the previous quarter. At the end of this article we will also compare TTPH to other stocks, including The York Water Company (NASDAQ:YORW), Akarti Therapeutics PLC (ADR) (NASDAQ:AKTX), and Trinity Biotech plc (ADR) (NASDAQ:TRIB) to get a better sense of its popularity.
Today there are a lot of metrics stock traders use to grade stocks. Two of the most under-the-radar metrics are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can outperform the S&P 500 by a superb margin (see the details here).
With all of this in mind, let’s review the latest action surrounding Tetraphase Pharmaceuticals Inc (NASDAQ:TTPH).
Hedge fund activity in Tetraphase Pharmaceuticals Inc (NASDAQ:TTPH)
Heading into Q4, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 29% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Great Point Partners, managed by Jeffrey Jay and David Kroin, holds the number one position in Tetraphase Pharmaceuticals Inc (NASDAQ:TTPH). Great Point Partners has a $8.4 million position in the stock, comprising 3.3% of its 13F portfolio. On Great Point Partners’s heels is Sectoral Asset Management, led by Jerome Pfund and Michael Sjostrom, holding a $5.2 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other professional money managers that are bullish include Farallon Capital, Howard Guberman’s Gruss Asset Management, and Israel Englander’s Millennium Management.