Is Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL) the right investment to pursue these days? Prominent investors are taking a bearish view. The number of long hedge fund bets were cut by 1 lately.
At the moment, there are many indicators investors can use to watch the equity markets. Two of the most under-the-radar are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top hedge fund managers can trounce the market by a healthy amount (see just how much).
Just as beneficial, positive insider trading activity is another way to break down the stock market universe. There are plenty of incentives for a corporate insider to drop shares of his or her company, but only one, very clear reason why they would behave bullishly. Several empirical studies have demonstrated the impressive potential of this tactic if shareholders understand what to do (learn more here).
Now, it's important to take a peek at the key action encompassing Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL).
Heading into 2013, a total of 19 of the hedge funds we track held long positions in this stock, a change of -5% from one quarter earlier. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were upping their holdings considerably.
According to our comprehensive database, Julian Baker and Felix Baker's Baker Bros. Advisors had the biggest position in Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL), worth close to $81 million, comprising 2.1% of its total 13F portfolio. Coming in second is William Leland Edwards of Palo Alto Investors, with a $44 million position; 1.1% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism include Ken Griffin's Citadel Investment Group, James E. Flynn's Deerfield Management and Israel Englander's Millennium Management.
Seeing as Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL) has witnessed declining sentiment from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of money managers who were dropping their full holdings heading into 2013. Intriguingly, Daniel Arbess's Xerion said goodbye to the largest stake of the "upper crust" of funds we track, comprising close to $18 million in call options. Jérôme Pfund and Michael Sjöström's fund, Sectoral Asset Management, also dumped its stock, about $11 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds heading into 2013.
Insider buying is most useful when the primary stock in question has seen transactions within the past 180 days. Over the last 180-day time frame, Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL) has experienced 1 unique insiders purchasing, and zero insider sales (see the details of insider trades here).
With the results shown by the aforementioned time-tested strategies, retail investors must always keep an eye on hedge fund and insider trading activity, and Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL) shareholders fit into this picture quite nicely.
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