Acorda Therapeutics Inc (ACOR) Continues To Fall From Favor With Top Investors

Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.

Is Acorda Therapeutics Inc (NASDAQ:ACOR) worth your attention right now? Investors who are in the know are taking a pessimistic view. The number of bullish hedge fund bets shrank by 2 recently. ACOR was in 19 hedge funds’ portfolios at the end of the third quarter of 2016. There were 21 hedge funds in our database with ACOR holdings at the end of the previous quarter. At the end of this article we will also compare ACOR to other stocks including Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), Amerisafe, Inc. (NASDAQ:AMSF), and American Equity Investment Life Holding (NYSE:AEL) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

How are hedge funds trading Acorda Therapeutics Inc (NASDAQ:ACOR)?

At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 10% from the previous quarter, while hedge fund ownership is down by more than 25% over the past two quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Matt Sirovich and Jeremy Mindich’s Scopia Capital has the number one position in Acorda Therapeutics Inc (NASDAQ:ACOR), worth close to $87.8 million, comprising 1.5% of its total 13F portfolio. The second most bullish fund manager is Julian Baker and Felix Baker of Baker Bros. Advisors, with a $76.4 million position. Some other peers that are bullish include Phill Gross and Robert Atchinson’s Adage Capital Management, D E Shaw, and Kevin Kotler’s Broadfin Capital.

Since Acorda Therapeutics Inc (NASDAQ:ACOR) has witnessed declining sentiment from the smart money, we can see that there was a specific group of money managers that slashed their positions entirely by the end of the third quarter. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace LLP dropped the largest stake of all the hedgies watched by Insider Monkey, totaling about $0.9 million in stock, and David Costen Haley’s HBK Investments was right behind this move, as the fund dropped about $0.7 million worth of shares. These transactions are interesting, as aggregate hedge fund interest was cut by 2 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Acorda Therapeutics Inc (NASDAQ:ACOR) but similarly valued. We will take a look at Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), Amerisafe, Inc. (NASDAQ:AMSF), American Equity Investment Life Holding (NYSE:AEL), and Alliance Resource Partners, L.P. (NASDAQ:ARLP). This group of stocks’ market values resemble ACOR’s market value.

As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $108 million. That figure was $268 million in ACOR’s case. Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) is the most popular stock in this table. On the other hand Alliance Resource Partners, L.P. (NASDAQ:ARLP) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Acorda Therapeutics Inc (NASDAQ:ACOR) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio, bearing in mind that several hedge funds have sold out of it recently.

Disclosure: None