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MannKind Corporation (MNKD): Are Hedge Funds Right About This Stock?

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MannKind Corporation (NASDAQ:MNKD) investors should pay attention to a decrease in hedge fund interest recently.

MannKind Corporation (NASDAQ:MNKD)

According to most stock holders, hedge funds are viewed as underperforming, old financial vehicles of the past. While there are greater than 8000 funds trading at the moment, we choose to focus on the bigwigs of this club, close to 450 funds. Most estimates calculate that this group oversees the majority of the hedge fund industry’s total asset base, and by paying attention to their highest performing stock picks, we have spotted a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Equally as beneficial, optimistic insider trading sentiment is another way to break down the stock market universe. Obviously, there are a variety of reasons for a bullish insider to cut shares of his or her company, but just one, very simple reason why they would buy. Several academic studies have demonstrated the useful potential of this strategy if you know where to look (learn more here).

Keeping this in mind, it’s important to take a look at the latest action encompassing MannKind Corporation (NASDAQ:MNKD).

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

At Q1’s end, a total of 6 of the hedge funds we track were bullish in this stock, a change of -25% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes considerably.

When looking at the hedgies we track, Renaissance Technologies, managed by Jim Simons, holds the largest position in MannKind Corporation (NASDAQ:MNKD). Renaissance Technologies has a $4.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $2.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds with similar optimism include Ken Griffin’s Citadel Investment Group, Cliff Asness’s AQR Capital Management and Ken Griffin’s Citadel Investment Group.

Judging by the fact that MannKind Corporation (NASDAQ:MNKD) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few funds who sold off their full holdings at the end of the first quarter. Intriguingly, Anand Parekh’s Alyeska Investment Group dumped the largest position of the 450+ funds we track, totaling about $2.3 million in call options, and Jean-Marie Eveillard of First Eagle Investment Management was right behind this move, as the fund cut about $1.8 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds at the end of the first quarter.

Insider trading activity in MannKind Corporation (NASDAQ:MNKD)

Insider buying is particularly usable when the company in question has seen transactions within the past six months. Over the last 180-day time frame, MannKind Corporation (NASDAQ:MNKD) has seen 2 unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s also review 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). This group of stocks belong to the biotechnology industry and their market caps are closest to MNKD’s market cap.

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