Is Puma Biotechnology Inc (NYSE:PBYI) going to take off soon? Prominent investors are becoming hopeful. The number of long hedge fund bets improved by 9 in recent months.
In the eyes of most market participants, hedge funds are viewed as unimportant, old financial vehicles of years past. While there are over 8000 funds trading at the moment, we look at the upper echelon of this group, around 450 funds. It is widely believed that this group has its hands on the majority of the hedge fund industry's total capital, and by watching their best equity investments, we have spotted a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy beat 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 outpaced the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Equally as beneficial, optimistic insider trading activity is a second way to break down the stock market universe. As the old adage goes: there are lots of incentives for a corporate insider to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Many academic studies have demonstrated the valuable potential of this method if shareholders understand where to look (learn more here).
Consequently, it's important to take a peek at the latest action encompassing Puma Biotechnology Inc (NYSE:PBYI).
At the end of the fourth quarter, a total of 11 of the hedge funds we track held long positions in this stock, a change of 450% from one quarter earlier. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were increasing their holdings substantially.
Of the funds we track, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the largest position in Puma Biotechnology Inc (NYSE:PBYI). Adage Capital Management has a $98.3 million position in the stock, comprising 0.4% of its 13F portfolio. Sitting at the No. 2 spot is Samuel Isaly of OrbiMed Advisors, with a $15.9 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other peers that are bullish include Bain Capital's Brookside Capital, Steven Cohen's SAC Capital Advisors and Dmitry Balyasny's Balyasny Asset Management.
Now, key hedge funds have jumped into Puma Biotechnology Inc (NYSE:PBYI) headfirst. OrbiMed Advisors, managed by Samuel Isaly, assembled the most valuable position in Puma Biotechnology Inc (NYSE:PBYI). OrbiMed Advisors had 15.9 million invested in the company at the end of the quarter. Steven Cohen's SAC Capital Advisors also initiated a $9.4 million position during the quarter. The other funds with brand new PBYI positions are Dmitry Balyasny's Balyasny Asset Management, Sean Cullinan's Point State Capital, and Jacob Gottlieb's Visium Asset Management.
Insider buying is particularly usable when the primary stock in question has seen transactions within the past six months. Over the last half-year time frame, Puma Biotechnology Inc (NYSE:PBYI) has experienced 2 unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let's also examine hedge fund and insider activity in other stocks similar to Puma Biotechnology Inc (NYSE:PBYI). These stocks are Exelixis, Inc. (NASDAQ:EXEL), NPS Pharmaceuticals, Inc. (NASDAQ:NPSP), PDL BioPharma Inc. (NASDAQ:PDLI), Celldex Therapeutics, Inc. (NASDAQ:CLDX), and MannKind Corporation (NASDAQ:MNKD). All of these stocks are in the biotechnology industry and their market caps resemble PBYI's market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Exelixis, Inc. (NASDAQ:EXEL)||10||1||0|
|NPS Pharmaceuticals, Inc. (NASDAQ:NPSP)||18||1||5|
|PDL BioPharma Inc. (NASDAQ:PDLI)||14||0||0|
|Celldex Therapeutics, Inc. (NASDAQ:CLDX)||12||0||0|
|MannKind Corporation (NASDAQ:MNKD)||8||2||0|
With the returns demonstrated by the aforementioned tactics, everyday investors must always pay attention to hedge fund and insider trading activity, and Puma Biotechnology Inc (NYSE:PBYI) applies perfectly to this mantra.