Hedge Funds Aren’t Crazy About Elan Corporation, plc (ADR) (NYSE:ELN) Anymore

Elan Corporation, plc (ADR) (NYSE:ELN) was in 22 hedge funds’ portfolio at the end of December. ELN shareholders have witnessed a decrease in activity from the world’s largest hedge funds lately. There were 30 hedge funds in our database with ELN holdings at the end of the previous quarter.

Elan Corporation, plc (ADR) (NYSE:ELN)

To the average investor, there are a multitude of indicators investors can use to analyze the equity markets. Two of the best are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top hedge fund managers can outperform the broader indices by a solid amount (see just how much).

Just as beneficial, optimistic insider trading sentiment is a second way to parse down the investments you’re interested in. As the old adage goes: there are lots of incentives for an upper level exec to get rid of shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the impressive potential of this strategy if shareholders know what to do (learn more here).

Now, we’re going to take a gander at the recent action regarding Elan Corporation, plc (ADR) (NYSE:ELN).

Hedge fund activity in Elan Corporation, plc (ADR) (NYSE:ELN)

At year’s end, a total of 22 of the hedge funds we track were long in this stock, a change of -27% from the previous quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably.

When looking at the hedgies we track, Sean Cullinan’s Point State Capital had the biggest position in Elan Corporation, plc (ADR) (NYSE:ELN), worth close to $56 million, accounting for 0.9% of its total 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $16 million position; the fund has 0% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Noam Gottesman’s GLG Partners, Jérôme Pfund and Michael Sjöström’s Sectoral Asset Management and Perella Weinberg Partners.

Judging by the fact that Elan Corporation, plc (ADR) (NYSE:ELN) has faced bearish sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of money managers who were dropping their entire stakes at the end of the year. It’s worth mentioning that Dinakar Singh’s TPG-AXON Management LP said goodbye to the biggest investment of all the hedgies we track, comprising close to $63 million in stock., and Stanley Druckenmiller of Duquesne Capital was right behind this move, as the fund said goodbye to about $34 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 8 funds at the end of the year.

What have insiders been doing with Elan Corporation, plc (ADR) (NYSE:ELN)?

Insider buying is particularly usable when the company in focus has experienced transactions within the past half-year. Over the latest half-year time frame, Elan Corporation, plc (ADR) (NYSE:ELN) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

With the returns exhibited by our strategies, everyday investors must always monitor hedge fund and insider trading activity, and Elan Corporation, plc (ADR) (NYSE:ELN) shareholders fit into this picture quite nicely.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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