In an effort to generate funds for clinical research and development and other general corporate purposes, Anthera Pharmaceuticals Inc (NASDAQ:ANTH) announced earlier today that it is planning to sell shares of common stock in an underwritten public offering. Anthera Pharmaceuticals Inc (NASDAQ:ANTH) is planning to offer these shares at $7.50 per share, and is expecting to generate around $25 million from the proceeds, before deducting discounts, commissions and other expenses related to the offering. Anthera Pharmaceuticals Inc (NASDAQ:ANTH) stock is soaring this year to say the least, as it has gained more than 385% year-to-date (yes, that is not a typo), even factoring in today’s drop of around 8% following the announcement of the underwritten public offering. The offering is a necessary move, as the company lost $7.7 million in the first quarter through its operations. It currently has no products on the market, with the biotech firm’s lead candidate being the lupus treatment blisibimod.
Looking at the hedge fund activity on Anthera Pharmaceuticals Inc (NASDAQ:ANTH), we can see there is optimism for the company’s product candidates, as there were nine hedge funds with $26.1 million in shares of the company at the end of March, up from seven hedge funds with $9.1 million in holdings in the stock at the end of 2014. However, given that the stock jumped by 183% and hedge funds’ resulting holdings were up by 186%, we can see that there wasn’t much of an increase in overall share ownership, even as two more funds bought into the stock.
Most investors don’t understand hedge funds and indicators that are based on hedge fund and insider activity. They ignore hedge funds because of their recent poor performance in the long-running bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns enjoyed (or not) by investors. We uncovered through extensive research that hedge funds’ long positions in small-cap stocks actually greatly outperformed the market from 1999 to 2012, and built a system around this. The 15 most popular small-cap stocks among funds beat the S&P 500 Index by more than 80 percentage points since the end of August 2012 when this system went live, returning a cumulative 135% vs. less than 55% for the S&P 500 Index (read the details).
Likewise, other research (not our own) has shown insider purchases are also effective piggybacking methods for investors. That’s why we believe investors should pay attention to what hedge funds and insiders are buying and keep them apprised of this information. However there was no insider activity in Anthera Pharmaceuticals Inc (NASDAQ:ANTH) during the first half of 2015.
Keeping this in mind, let’s take a look at the latest hedge fund activity regarding Anthera Pharmaceuticals Inc (NASDAQ:ANTH).
How are hedge funds trading Anthera Pharmaceuticals Inc (NASDAQ:ANTH)?
Among the hedge funds tracked by Insider Monkey, Broadfin Capital, managed by Kevin Kotler, holds the largest position in Anthera Pharmaceuticals Inc (NASDAQ:ANTH). Broadfin Capital holds around 2.4 million shares valued at $10.8 million at the end of March, comprising 0.8% of its 13F portfolio. Coming in second is Joseph Edelman of Perceptive Advisors, with 1.6 million shares of the company; 0.6% of his fund’s 13F portfolio is allocated to the stock. Some other hedgies that hold long positions comprise Howard Guberman’s Gruss Asset Management, Kris Jenner, Gordon Bussard, and Graham McPhail’s Rock Springs Capital Management, and Stanley Shopkorn and Douglas Day’s Hilltop Park Associates.
As hedge fund managers were pouring more money into Anthera Pharmaceuticals Inc (NASDAQ:ANTH), we can expect that some hedgies opened up fresh positions in the stock during the first quarter. Rock Springs Capital Management initiated the largest position in Anthera Pharmaceuticals Inc (NASDAQ:ANTH), buying around 425,000 shares during the January – March period. Hilltop Park Associates also initiated a fresh position in the stock, buying around 136,000 shares. The other funds with brand new Anthera positions are Charles Davidson’s Wexford Capital, Israel Englander’s Millennium Management, and Jim Simons‘ Renaissance Technologies.
Hedge funds were right to invest a little more in the stock during the first quarter, as the stock price has almost doubled since the end of that quarter. Even though the stock has pulled back a little today due to the announcement of the underwritten public offering, we recommend this stock as a good buying opportunity.
Disclosure: None
