This Metric Says You Are Smart to Buy Dynavax Technologies Corporation (DVAX): Orexigen Therapeutics, Inc. (OREX), Lannett Company, Inc. (LCI)

Dynavax Technologies Corporation (NASDAQ:DVAX) was in 11 hedge funds’ portfolio at the end of the fourth quarter of 2012. DVAX shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. There were 10 hedge funds in our database with DVAX holdings at the end of the previous quarter.

Dynavax Technologies CorporationTo most shareholders, hedge funds are perceived as worthless, outdated investment tools of yesteryear. While there are over 8000 funds with their doors open today, we look at the crème de la crème of this group, close to 450 funds. Most estimates calculate that this group oversees the majority of all hedge funds’ total capital, and by monitoring their highest performing equity investments, we have formulated a few investment strategies that have historically beaten the broader indices. 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 topped the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).

Just as beneficial, positive insider trading sentiment is another way to break down the investments you’re interested in. As the old adage goes: there are plenty of stimuli for an upper level exec to cut shares of his or her company, but just one, very clear reason why they would behave bullishly. Various academic studies have demonstrated the market-beating potential of this tactic if “monkeys” understand what to do (learn more here).

With all of this in mind, it’s important to take a peek at the latest action encompassing Dynavax Technologies Corporation (NASDAQ:DVAX).

What does the smart money think about Dynavax Technologies Corporation (NASDAQ:DVAX)?

At year’s end, a total of 11 of the hedge funds we track held long positions in this stock, a change of 10% from one quarter earlier. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings meaningfully.

According to our comprehensive database, Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, holds the most valuable position in Dynavax Technologies Corporation (NASDAQ:DVAX). Healthcor Management LP has a $50 million position in the stock, comprising 2.7% of its 13F portfolio. Sitting at the No. 2 spot is SAC Capital Advisors, managed by Steven Cohen, which held a $27 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Israel Englander’s Millennium Management, James E. Flynn’s Deerfield Management and Mark Kingdon’s Kingdon Capital.

Now, key money managers were breaking ground themselves. Deerfield Management, managed by James E. Flynn, assembled the most outsized position in Dynavax Technologies Corporation (NASDAQ:DVAX). Deerfield Management had 7 million invested in the company at the end of the quarter. Mark Kingdon’s Kingdon Capital also made a $4 million investment in the stock during the quarter. The other funds with new positions in the stock are Thomas Steyer’s Farallon Capital, Charles Davidson’s Wexford Capital, and Jacob Gottlieb’s Visium Asset Management.

What do corporate executives and insiders think about Dynavax Technologies Corporation (NASDAQ:DVAX)?

Insider purchases made by high-level executives is most useful when the company in question has experienced transactions within the past 180 days. Over the latest six-month time frame, Dynavax Technologies Corporation (NASDAQ:DVAX) has experienced zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Dynavax Technologies Corporation (NASDAQ:DVAX). These stocks are Orexigen Therapeutics, Inc. (NASDAQ:OREX), Lannett Company, Inc. (NYSEAMEX:LCI), Simcere Pharmaceutical Group (ADR) (NYSE:SCR), Depomed Inc (NASDAQ:DEPO), and Synergy Pharmaceuticals Inc (NASDAQ:SGYP). This group of stocks are the members of the drug manufacturers – other industry and their market caps match DVAX’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Orexigen Therapeutics, Inc. (NASDAQ:OREX) 16 0 1
Lannett Company, Inc. (NYSEAMEX:LCI) 2 2 4
Simcere Pharmaceutical Group (ADR) (NYSE:SCR) 1 0 0
Depomed Inc (NASDAQ:DEPO) 11 1 2
Synergy Pharmaceuticals Inc (NASDAQ:SGYP) 4 1 0

With the returns exhibited by the aforementioned time-tested strategies, everyday investors should always keep an eye on hedge fund and insider trading activity, and Dynavax Technologies Corporation (NASDAQ:DVAX) shareholders fit into this picture quite nicely.

Click here to learn why you should track hedge funds

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Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

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