Questcor Pharmaceuticals Inc (NASDAQ:QCOR) has seen a decrease in hedge fund sentiment lately.
According to most shareholders, hedge funds are seen as worthless, outdated investment vehicles of yesteryear. While there are over 8000 funds in operation at present, we hone in on the top tier of this group, about 450 funds. It is widely believed that this group controls the lion's share of the smart money's total asset base, and by monitoring their top equity investments, we have deciphered a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per 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 topped the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).
Just as important, bullish insider trading sentiment is another way to break down the financial markets. There are a number of motivations for an executive to downsize shares of his or her company, but just one, very simple reason why they would buy. Several academic studies have demonstrated the impressive potential of this tactic if "monkeys" understand where to look (learn more here).
Now, we're going to take a look at the recent action regarding Questcor Pharmaceuticals Inc (NASDAQ:QCOR).
Heading into 2013, a total of 21 of the hedge funds we track were long in this stock, a change of -34% from one quarter earlier. With hedge funds' sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings considerably.
According to our comprehensive database, James E. Flynn's Deerfield Management had the largest position in Questcor Pharmaceuticals Inc (NASDAQ:QCOR), worth close to $132 million, accounting for 7.3% of its total 13F portfolio. On Deerfield Management's heels is William Leland Edwards of Palo Alto Investors, with a $59 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining hedgies that hold long positions include Bernard Horn's Polaris Capital Management, David Gallo's Valinor Management LLC and Ken Griffin's Citadel Investment Group.
Because Questcor Pharmaceuticals Inc (NASDAQ:QCOR) has experienced bearish sentiment from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of hedge funds who were dropping their positions entirely at the end of the year. Interestingly, Tiger Global Management LLC cut the biggest position of the "upper crust" of funds we monitor, totaling an estimated $45 million in stock., and Jacob Gottlieb of Visium Asset Management was right behind this move, as the fund dropped about $23 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 11 funds at the end of the year.
Insider buying is best served when the primary stock in question has experienced transactions within the past six months. Over the latest six-month time frame, Questcor Pharmaceuticals Inc (NASDAQ:QCOR) has experienced 2 unique insiders purchasing, and 1 insider sales (see the details of insider trades here).
With the results shown by our tactics, retail investors must always keep an eye on hedge fund and insider trading activity, and Questcor Pharmaceuticals Inc (NASDAQ:QCOR) is an important part of this process.
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