Is Theravance Inc (NASDAQ:THRX) a good investment today? Investors who are in the know are selling. The number of long hedge fund positions decreased by 3 in recent months.
If you’d ask most market participants, hedge funds are viewed as worthless, old financial tools of years past. While there are over 8000 funds trading at present, we at Insider Monkey look at the bigwigs of this group, around 450 funds. It is estimated that this group oversees most of all hedge funds’ total capital, and by keeping an eye on their top investments, we have figured out a few investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outstripped 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 trumped the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Equally as key, bullish insider trading sentiment is a second way to parse down the stock market universe. Obviously, there are plenty of incentives for a corporate insider to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the market-beating potential of this method if investors understand where to look (learn more here).
Consequently, let’s take a gander at the recent action regarding Theravance Inc (NASDAQ:THRX).
What have hedge funds been doing with Theravance Inc (NASDAQ:THRX)?
At the end of the fourth quarter, a total of 10 of the hedge funds we track were long in this stock, a change of -23% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings significantly.
According to our comprehensive database, Seth Klarman’s Baupost Group had the most valuable position in Theravance Inc (NASDAQ:THRX), worth close to $301 million, accounting for 9.7% of its total 13F portfolio. The second largest stake is held by Iridian Asset Management, managed by David Cohen and Harold Levy, which held a $71 million position; 0% of its 13F portfolio is allocated to the stock. Some other hedge funds that hold long positions include Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, Jamie Zimmerman’s Litespeed Management and Jean-Marie Eveillard’s First Eagle Investment Management.
Because Theravance Inc (NASDAQ:THRX) has experienced falling interest from the smart money, it’s easy to see that there were a few fund managers who sold off their positions entirely in Q4. Interestingly, John Overdeck and David Siegel’s Two Sigma Advisors sold off the biggest stake of all the hedgies we track, totaling about $1 million in stock., and Cliff Asness of AQR Capital Management was right behind this move, as the fund cut about $1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 3 funds in Q4.
How have insiders been trading Theravance Inc (NASDAQ:THRX)?
Bullish insider trading is best served when the company we’re looking at has experienced transactions within the past half-year. Over the last half-year time period, Theravance Inc (NASDAQ:THRX) has experienced 1 unique insiders buying, and 1 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Theravance Inc (NASDAQ:THRX). These stocks are Incyte Corporation (NASDAQ:INCY), Arena Pharmaceuticals, Inc. (NASDAQ:ARNA), Questcor Pharmaceuticals Inc (NASDAQ:QCOR), Charles River Laboratories (NYSE:CRL), and Infinity Pharmaceuticals Inc. (NASDAQ:INFI). This group of stocks are the members of the biotechnology industry and their market caps are closest to THRX’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Incyte Corporation (NASDAQ:INCY) | 15 | 1 | 6 |
| Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) | 11 | 0 | 1 |
| Questcor Pharmaceuticals Inc (NASDAQ:QCOR) | 21 | 2 | 2 |
| Charles River Laboratories (NYSE:CRL) | 20 | 0 | 7 |
| Infinity Pharmaceuticals Inc. (NASDAQ:INFI) | 22 | 0 | 2 |
With the results demonstrated by the aforementioned tactics, retail investors should always watch hedge fund and insider trading activity, and Theravance Inc (NASDAQ:THRX) shareholders fit into this picture quite nicely.
