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Sunesis Pharmaceuticals, Inc. (SNSS): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

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Is Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS) a healthy stock for your portfolio? Money managers are turning bullish. The number of bullish hedge fund positions moved up by 6 recently.

In the eyes of most stock holders, hedge funds are perceived as worthless, outdated financial tools of the past. While there are over 8000 funds with their doors open at present, we at Insider Monkey look at the top tier of this group, around 450 funds. Most estimates calculate that this group has its hands on the majority of all hedge funds’ total capital, and by watching their top picks, we have unearthed a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outperformed 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS)Just as integral, optimistic insider trading sentiment is a second way to break down the marketplace. As the old adage goes: there are many motivations for a corporate insider to cut shares of his or her company, but only one, very obvious reason why they would buy. Plenty of academic studies have demonstrated the market-beating potential of this strategy if piggybackers understand where to look (learn more here).

With these “truths” under our belt, it’s important to take a look at the latest action encompassing Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS).

Hedge fund activity in Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS)

Heading into Q2, a total of 16 of the hedge funds we track held long positions in this stock, a change of 60% from the previous quarter. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes meaningfully.

When looking at the hedgies we track, Peter Kolchinsky’s RA Capital Management had the most valuable position in Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS), worth close to $26.6 million, comprising 5.7% of its total 13F portfolio. On RA Capital Management’s heels is Jacob Gottlieb of Visium Asset Management, with a $22.3 million position; 0.6% of its 13F portfolio is allocated to the stock. Some other hedge funds with similar optimism include Israel Englander’s Millennium Management, Richard Driehaus’s Driehaus Capital and Mark Broach’s Manatuck Hill Partners.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Millennium Management, managed by Israel Englander, assembled the most outsized position in Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS). Millennium Management had 7.6 million invested in the company at the end of the quarter. Mark Broach’s Manatuck Hill Partners also initiated a $1.5 million position during the quarter. The other funds with new positions in the stock are Andrew Spokes’s Farallon Capital, Louis Bacon’s Moore Global Investments, and Charles Davidson’s Wexford Capital.

What have insiders been doing with Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS)?

Bullish insider trading is at its handiest when the primary stock in question has experienced transactions within the past 180 days. Over the last half-year time period, Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS). These stocks are Curis, Inc. (NASDAQ:CRIS), Repros Therapeutics Inc (NASDAQ:RPRX), Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX), XOMA Corp (NASDAQ:XOMA), and Cerus Corporation (NASDAQ:CERS). This group of stocks are in the biotechnology industry and their market caps are closest to SNSS’s market cap.

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