Is Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) a buy right now? The smart money is taking a bearish view. The number of bullish hedge fund positions were cut by 2 lately.
In the 21st century investor’s toolkit, there are dozens of methods market participants can use to monitor stocks. Two of the most underrated are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite fund managers can outpace the market by a healthy amount (see just how much).
Equally as key, positive insider trading sentiment is a second way to parse down the investments you’re interested in. As the old adage goes: there are a number of stimuli for a corporate insider to cut shares of his or her company, but only one, very simple reason why they would buy. Plenty of empirical studies have demonstrated the market-beating potential of this tactic if you know where to look (learn more here).
With these “truths” under our belt, we’re going to take a gander at the recent action regarding Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN).
How are hedge funds trading Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN)?
Heading into 2013, a total of 16 of the hedge funds we track were long in this stock, a change of -11% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes significantly.
According to our comprehensive database, Daniel Gold’s QVT Financial had the most valuable position in Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN), worth close to $56.6 million, accounting for 3.8% of its total 13F portfolio. The second largest stake is held by RA Capital Management, managed by Peter Kolchinsky, which held a $21.6 million position; 7.6% of its 13F portfolio is allocated to the stock. Other peers that hold long positions include James E. Flynn’s Deerfield Management, Ken Griffin’s Citadel Investment Group and Phill Gross and Robert Atchinson’s Adage Capital Management.
Since Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) has experienced a declination in interest from the entirety of the hedge funds we track, logic holds that there were a few fund managers that slashed their positions entirely heading into 2013. At the top of the heap, Richard Schimel’s Diamondback Capital dumped the largest investment of all the hedgies we track, worth close to $8.8 million in stock.. John Burbank’s fund, Passport Capital, also dropped its stock, about $5.2 million worth. These moves are important to note, as aggregate hedge fund interest fell by 2 funds heading into 2013.
How are insiders trading Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN)?
Insider trading activity, especially when it’s bullish, is particularly usable when the company in focus has experienced transactions within the past 180 days. Over the last half-year time frame, Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) has seen zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN). These stocks are Dendreon Corporation (NASDAQ:DNDN), China Biologic Products Inc (NASDAQ:CBPO), Clovis Oncology Inc (NASDAQ:CLVS), NPS Pharmaceuticals, Inc. (NASDAQ:NPSP), and Exelixis, Inc. (NASDAQ:EXEL). This group of stocks are in the biotechnology industry and their market caps are closest to ACHN’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Dendreon Corporation (NASDAQ:DNDN) | 12 | 0 | 0 |
| China Biologic Products Inc (NASDAQ:CBPO) | 2 | 0 | 1 |
| Clovis Oncology Inc (NASDAQ:CLVS) | 7 | 0 | 1 |
| NPS Pharmaceuticals, Inc. (NASDAQ:NPSP) | 18 | 1 | 5 |
| Exelixis, Inc. (NASDAQ:EXEL) | 10 | 1 | 0 |
With the returns demonstrated by our time-tested strategies, retail investors should always pay attention to hedge fund and insider trading sentiment, and Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) shareholders fit into this picture quite nicely.
