Is Santarus, Inc. (NASDAQ:SNTS) a buy, sell, or hold? Hedge funds are betting on the stock. The number of bullish hedge fund positions rose by 1 lately.
In the eyes of most traders, hedge funds are perceived as unimportant, old financial tools of years past. While there are over 8000 funds in operation at present, we at Insider Monkey choose to focus on the bigwigs of this club, around 450 funds. It is estimated that this group oversees most of the hedge fund industry's total asset base, and by paying attention to their highest performing investments, we have discovered a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy beat 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 24 percentage points in 7 months (see all of our picks from August).
Equally as integral, optimistic insider trading activity is another way to break down the marketplace. As the old adage goes: there are plenty of motivations for an upper level exec to sell shares of his or her company, but only one, very simple reason why they would behave bullishly. Various academic studies have demonstrated the market-beating potential of this tactic if you understand what to do (learn more here).
With these "truths" under our belt, let's take a look at the recent action regarding Santarus, Inc. (NASDAQ:SNTS).
Heading into 2013, a total of 16 of the hedge funds we track held long positions in this stock, a change of 7% from the third quarter. With hedgies' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings substantially.
According to our comprehensive database, SAC Capital Advisors, managed by Steven Cohen, holds the most valuable position in Santarus, Inc. (NASDAQ:SNTS). SAC Capital Advisors has a $36.8 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Jim Simons of Renaissance Technologies, with a $25.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Kevin Kotler's Broadfin Capital, Jacob Gottlieb's Visium Asset Management and Robert B. Gillam's McKinley Capital Management.
Now, specific money managers have been driving this bullishness. Visium Asset Management, managed by Jacob Gottlieb, initiated the most valuable position in Santarus, Inc. (NASDAQ:SNTS). Visium Asset Management had 16.9 million invested in the company at the end of the quarter. Robert B. Gillam's McKinley Capital Management also made a $3.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Mark Kingdon's Kingdon Capital and Paul Tudor Jones's Tudor Investment Corp.
Bullish insider trading is particularly usable when the company we're looking at has experienced transactions within the past half-year. Over the latest six-month time period, Santarus, Inc. (NASDAQ:SNTS) has seen 1 unique insiders buying, and 12 insider sales (see the details of insider trades here).
Let's also examine hedge fund and insider activity in other stocks similar to Santarus, Inc. (NASDAQ:SNTS). These stocks are MannKind Corporation (NASDAQ:MNKD), PDL BioPharma Inc. (NASDAQ:PDLI), Sarepta Therapeutics Inc (NASDAQ:SRPT), Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX), and VIVUS, Inc. (NASDAQ:VVUS). This group of stocks are in the biotechnology industry and their market caps resemble SNTS's market cap.