NPS Pharmaceuticals, Inc. (NASDAQ:NPSP) shareholders have witnessed a decrease in hedge fund interest recently.
If you’d ask most shareholders, hedge funds are assumed to be slow, outdated investment tools of the past. While there are more than 8000 funds in operation at present, we look at the top tier of this group, close to 450 funds. It is estimated that this group controls the majority of the hedge fund industry’s total asset base, and by tracking their top stock picks, we have unsheathed a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started 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 (check out a sample of our picks).
Just as important, positive insider trading sentiment is another way to break down the financial markets. Just as you’d expect, there are a variety of reasons for a corporate insider to downsize shares of his or her company, but just one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the market-beating potential of this strategy if you know what to do (learn more here).
With all of this in mind, it’s important to take a gander at the recent action surrounding NPS Pharmaceuticals, Inc. (NASDAQ:NPSP).
What have hedge funds been doing with NPS Pharmaceuticals, Inc. (NASDAQ:NPSP)?
Heading into Q2, a total of 18 of the hedge funds we track were long in this stock, a change of -5% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes significantly.
According to our comprehensive database, Israel Englander’s Millennium Management had the biggest position in NPS Pharmaceuticals, Inc. (NASDAQ:NPSP), worth close to $26.1 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Sectoral Asset Management, managed by Jerome Pfund and Michael Sjostrom, which held a $23.5 million position; 0.7% of its 13F portfolio is allocated to the stock. Remaining hedgies that are bullish include Kevin Kotler’s Broadfin Capital, Joseph Edelman’s Perceptive Advisors and Israel Englander’s Millennium Management.
Since NPS Pharmaceuticals, Inc. (NASDAQ:NPSP) has experienced a declination in interest from the smart money, it’s safe to say that there lies a certain “tier” of fund managers that elected to cut their positions entirely heading into Q2. Interestingly, Samuel Isaly’s OrbiMed Advisors sold off the largest position of the “upper crust” of funds we track, valued at an estimated $11.7 million in stock.. Drew Cupps’s fund, Cupps Capital Management, also dropped its stock, about $2.2 million worth. These moves are interesting, as aggregate hedge fund interest fell by 1 funds heading into Q2.
What have insiders been doing with NPS Pharmaceuticals, Inc. (NASDAQ:NPSP)?
Bullish insider trading is most useful when the company in focus has experienced transactions within the past half-year. Over the last six-month time period, NPS Pharmaceuticals, Inc. (NASDAQ:NPSP) has experienced zero unique insiders buying, and 8 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to NPS Pharmaceuticals, Inc. (NASDAQ:NPSP). These stocks are MannKind Corporation (NASDAQ:MNKD), Puma Biotechnology Inc (NYSE:PBYI), Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN), Celldex Therapeutics, Inc. (NASDAQ:CLDX), and Exelixis, Inc. (NASDAQ:EXEL). This group of stocks are the members of the biotechnology industry and their market caps are similar to NPSP’s market cap.