NPS Pharmaceuticals, Inc. (NASDAQ:NPSP) has seen a decrease in enthusiasm from smart money in recent months.
According to most investors, hedge funds are perceived as worthless, old financial tools of years past. While there are over 8000 funds with their doors open at present, we at Insider Monkey look at the upper echelon of this club, about 450 funds. It is estimated that this group oversees the majority of all hedge funds' total capital, and by tracking their top stock picks, we have formulated a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year 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 trumped the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Just as beneficial, positive insider trading activity is another way to break down the marketplace. Obviously, there are lots of motivations for an insider to get rid of shares of his or her company, but just one, very simple reason why they would buy. Various empirical studies have demonstrated the useful potential of this tactic if shareholders understand where to look (learn more here).
Now, we're going to take a glance at the key action encompassing NPS Pharmaceuticals, Inc. (NASDAQ:NPSP).
At the end of the fourth quarter, a total of 18 of the hedge funds we track were bullish in this stock, a change of 0% from the third quarter. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes significantly.
When looking at the hedgies we track, Sectoral Asset Management, managed by Jerome Pfund and Michael Sjostrom, holds the most valuable position in NPS Pharmaceuticals, Inc. (NASDAQ:NPSP). Sectoral Asset Management has a $16.2 million position in the stock, comprising 0.6% of its 13F portfolio. Coming in second is OrbiMed Advisors, managed by Samuel Isaly, which held a $11.7 million position; 0.4% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions include Cliff Asness's AQR Capital Management, Drew Cupps's Cupps Capital Management and SAC Subsidiary's CR Intrinsic Investors.
Judging by the fact that NPS Pharmaceuticals, Inc. (NASDAQ:NPSP) has witnessed a declination in interest from the aggregate hedge fund industry, logic holds that there is a sect of money managers that decided to sell off their entire stakes heading into 2013. It's worth mentioning that Jay Venkatesen's Ayer Capital Management dumped the largest investment of the 450+ funds we track, valued at close to $13.4 million in stock., and Richard Schimel of Diamondback Capital was right behind this move, as the fund said goodbye to about $6.7 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Bullish insider trading is particularly usable when the company in focus has experienced transactions within the past 180 days. Over the last 180-day time frame, NPS Pharmaceuticals, Inc. (NASDAQ:NPSP) has experienced 1 unique insiders buying, and 5 insider sales (see the details of insider trades here).
Let's also take a look at 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). All of these stocks are in the biotechnology industry and their market caps are closest to NPSP's market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|MannKind Corporation (NASDAQ:MNKD)||8||2||0|
|Puma Biotechnology Inc (NYSE:PBYI)||11||2||0|
|Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN)||16||0||1|
|Celldex Therapeutics, Inc. (NASDAQ:CLDX)||12||0||0|
|Exelixis, Inc. (NASDAQ:EXEL)||10||1||0|
With the results demonstrated by our strategies, everyday investors must always monitor hedge fund and insider trading activity, and NPS Pharmaceuticals, Inc. (NASDAQ:NPSP) is no exception.