Is Neurocrine Biosciences, Inc. (NBIX) a Good Stock to Buy?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Neurocrine Biosciences, Inc. (NASDAQ:NBIX).

Hedge fund interest in Neurocrine Biosciences, Inc. (NASDAQ:NBIX) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as USG Corporation (NYSE:USG), FNFV Group (NYSE:FNFV), and Portland General Electric Company (NYSE:POR) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

Keeping this in mind, we’re going to take a look at the recent action surrounding Neurocrine Biosciences, Inc. (NASDAQ:NBIX).

What have hedge funds been doing with Neurocrine Biosciences, Inc. (NASDAQ:NBIX)?

At the end of the third quarter, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the second quarter of 2016. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Perceptive Advisors, managed by Joseph Edelman, holds the most valuable position in Neurocrine Biosciences, Inc. (NASDAQ:NBIX). The fund has a $125.4 million position in the stock, comprising 8.1% of its 13F portfolio. Coming in second is Samuel Isaly of OrbiMed Advisors, with a $91.9 million position; the fund has 1% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions comprise Doug Silverman and Alexander Klabin’s Senator Investment Group, Ken Griffin’s Citadel Investment Group and Julian Baker and Felix Baker’s Baker Bros. Advisors.

Since Neurocrine Biosciences, Inc. (NASDAQ:NBIX) has experienced no change in sentiment from the entirety of the hedge funds we track, we think it is important to take a look at the funds that cut their full holdings by the end of the third quarter. At the top of the heap, Arthur B Cohen and Joseph Healey’s Healthcor Management LP sold off the largest position of the 700 funds tracked by Insider Monkey, worth about $20.5 million worth of shares about $14.1 million in call options. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks similar to Neurocrine Biosciences, Inc. (NASDAQ:NBIX). These stocks are USG Corporation (NYSE:USG), FNFV Group (NYSE:FNFV), Portland General Electric Company (NYSE:POR), and Gulfport Energy Corporation (NASDAQ:GPOR). All of these stocks’ market caps resemble NBIX’s market cap.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $625 million. That figure was $636 million in NBIX’s case. Gulfport Energy Corporation (NASDAQ:GPOR) is the most popular stock in this table. On the other hand Portland General Electric Company (NYSE:POR) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Neurocrine Biosciences, Inc. (NASDAQ:NBIX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: none