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Is MannKind Corporation (MNKD) Going to Burn These Hedge Funds?

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MannKind Corporation (NASDAQ:MNKD) was in 8 hedge funds’ portfolio at the end of December. MNKD shareholders have witnessed an increase in hedge fund interest of late. There were 4 hedge funds in our database with MNKD holdings at the end of the previous quarter.

MannKind Corporation (NASDAQ:MNKD)

In the eyes of most market participants, hedge funds are seen as underperforming, old financial tools of years past. While there are greater than 8000 funds with their doors open at the moment, we at Insider Monkey look at the top tier of this group, close to 450 funds. It is widely believed that this group has its hands on most of the hedge fund industry’s total capital, and by monitoring their highest performing investments, we have come up with a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to 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 (explore the details and some picks here).

Equally as integral, optimistic insider trading activity is another way to parse down the stock market universe. Just as you’d expect, there are a number of reasons for a corporate insider to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Several empirical studies have demonstrated the market-beating potential of this method if you understand what to do (learn more here).

Now, let’s take a look at the recent action regarding MannKind Corporation (NASDAQ:MNKD).

How are hedge funds trading MannKind Corporation (NASDAQ:MNKD)?

At the end of the fourth quarter, a total of 8 of the hedge funds we track held long positions in this stock, a change of 100% from one quarter earlier. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes significantly.

When looking at the hedgies we track, Alyeska Investment Group, managed by Anand Parekh, holds the most valuable position in MannKind Corporation (NASDAQ:MNKD). Alyeska Investment Group has a $2.3 million call position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Millennium Management, managed by Israel Englander, which held a $1.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedge funds with similar optimism include Jean-Marie Eveillard’s First Eagle Investment Management, Ken Griffin’s Citadel Investment Group and Cliff Asness’s AQR Capital Management.

As aggregate interest increased, some big names were leading the bulls’ herd. Alyeska Investment Group, managed by Anand Parekh, created the biggest call position in MannKind Corporation (NASDAQ:MNKD). Alyeska Investment Group had 2.3 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $1.9 million investment in the stock during the quarter. The other funds with brand new MNKD positions are Jean-Marie Eveillard’s First Eagle Investment Management, D. E. Shaw’s D E Shaw, and Alexander Mitchell’s Scopus Asset Management.

How have insiders been trading MannKind Corporation (NASDAQ:MNKD)?

Insider buying is at its handiest when the company we’re looking at has experienced transactions within the past six months. Over the last 180-day time period, MannKind Corporation (NASDAQ:MNKD) has experienced 2 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 MannKind Corporation (NASDAQ:MNKD). These stocks are VIVUS, Inc. (NASDAQ:VVUS), NPS Pharmaceuticals, Inc. (NASDAQ:NPSP), Celldex Therapeutics, Inc. (NASDAQ:CLDX), PDL BioPharma Inc. (NASDAQ:PDLI), and Puma Biotechnology Inc (NYSE:PBYI). All of these stocks are in the biotechnology industry and their market caps are closest to MNKD’s market cap.

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