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InterMune Inc (NASDAQ:ITMN): Insiders Are Dumping, Should You?

InterMune Inc (NASDAQ:ITMN) was in 14 hedge funds’ portfolio at the end of the fourth quarter of 2012. ITMN has seen a decrease in hedge fund interest of late. There were 18 hedge funds in our database with ITMN holdings at the end of the previous quarter.

InterMune Inc (NASDAQ:ITMN)

In the 21st century investor’s toolkit, there are plenty of methods market participants can use to monitor their holdings. Some of the best are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best money managers can trounce the market by a significant margin (see just how much).

Just as important, optimistic insider trading activity is a second way to break down the investments you’re interested in. Obviously, there are a number of reasons for a bullish insider to drop shares of his or her company, but only one, very obvious reason why they would behave bullishly. Many academic studies have demonstrated the market-beating potential of this tactic if shareholders understand what to do (learn more here).

Now, we’re going to take a look at the key action regarding InterMune Inc (NASDAQ:ITMN).

How are hedge funds trading InterMune Inc (NASDAQ:ITMN)?

At the end of the fourth quarter, a total of 14 of the hedge funds we track were long in this stock, a change of -22% from the previous quarter. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes significantly.

Of the funds we track, Daniel Gold’s QVT Financial had the most valuable position in InterMune Inc (NASDAQ:ITMN), worth close to $55 million, accounting for 3.7% of its total 13F portfolio. Coming in second is Jerome Pfund and Michael Sjostrom of Sectoral Asset Management, with a $52 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include James E. Flynn’s Deerfield Management, William Leland Edwards’s Palo Alto Investors and Julian Baker and Felix Baker’s Baker Bros. Advisors.

Due to the fact that InterMune Inc (NASDAQ:ITMN) has experienced bearish sentiment from hedge fund managers, logic holds that there exists a select few money managers that decided to sell off their full holdings in Q4. It’s worth mentioning that Israel Englander’s Millennium Management said goodbye to the biggest investment of the 450+ funds we watch, valued at close to $4 million in call options, and Mark Broach of Manatuck Hill Partners was right behind this move, as the fund cut about $3 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 4 funds in Q4.

How are insiders trading InterMune Inc (NASDAQ:ITMN)?

Insider purchases made by high-level executives is particularly usable when the company in question has experienced transactions within the past 180 days. Over the latest six-month time period, InterMune Inc (NASDAQ:ITMN) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to InterMune Inc (NASDAQ:ITMN). These stocks are Dendreon Corporation (NASDAQ:DNDN), China Biologic Products Inc (NASDAQ:CBPO), Clovis Oncology Inc (NASDAQ:CLVS), TESARO Inc (NASDAQ:TSRO), and Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN). This group of stocks are the members of the biotechnology industry and their market caps resemble ITMN’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Dendreon Corporation (NASDAQ:DNDN) 12 0 0
China Biologic Products Inc (NASDAQ:CBPO) 2 0 1
Clovis Oncology Inc (NASDAQ:CLVS) 7 0 1
Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) 16 0 1

With the returns demonstrated by Insider Monkey’s research, retail investors should always keep an eye on hedge fund and insider trading activity, and InterMune Inc (NASDAQ:ITMN) shareholders fit into this picture quite nicely.

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

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