With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was RedHill Biopharma Ltd – ADR (NASDAQ:RDHL).
RedHill Biopharma Ltd – ADR has experienced an increase in enthusiasm from smart money of late. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Capstone Turbine Corporation (NASDAQ:CPST), Energy Recovery, Inc. (NASDAQ:ERII), and ContraFect Corp (NASDAQ:CFRX) to gather more data points.
In the eyes of most stock holders, hedge funds are viewed as worthless, old financial vehicles of the past. While there are over 8000 funds in operation today, We look at the crème de la crème of this club, about 700 funds. These money managers direct most of the smart money’s total asset base, and by tailing their inimitable stock picks, Insider Monkey has unearthed a few investment strategies that have historically exceeded the broader indices. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Now, let’s check out the key action surrounding RedHill Biopharma Ltd – ADR (NASDAQ:RDHL).
How have hedgies been trading RedHill Biopharma Ltd – ADR (NASDAQ:RDHL)?
Heading into Q4, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 67% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Kevin Kotler’s Broadfin Capital has the number one position in RedHill Biopharma Ltd – ADR (NASDAQ:RDHL), worth close to $10.7 million, comprising 0.6% of its total 13F portfolio. The second most bullish fund manager is Samuel Isaly of OrbiMed Advisors, with a $7.3 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism consist of Jacob Gottlieb’s Visium Asset Management, Hal Mintz’s Sabby Capital and Israel Englander’s Millennium Management.
As industrywide interest jumped, specific money managers have jumped into RedHill Biopharma Ltd – ADR (NASDAQ:RDHL) headfirst. Visium Asset Managemen assembled the biggest position in RedHill Biopharma Ltd – ADR (NASDAQ:RDHL). Visium Asset Management had $6.5 million invested in the company at the end of the quarter. Sabby Capital also made a $2.2 million investment in the stock during the quarter. The only other fund with a brand new RDHL position is Millennium Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as RedHill Biopharma Ltd – ADR (NASDAQ:RDHL) but similarly valued. These stocks are Capstone Turbine Corporation (NASDAQ:CPST), Energy Recovery, Inc. (NASDAQ:ERII), ContraFect Corp (NASDAQ:CFRX), and Advent/Claymore Enhanced Growth & Income (NYSE:LCM). This group of stocks’ market caps match RDHL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CPST | 7 | 4642 | -2 |
| ERII | 4 | 669 | 1 |
| CFRX | 6 | 9991 | 1 |
| LCM | 6 | 4660 | 4 |
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $5 million, significantly below the $27 million figure in RDHL’s case. Capstone Turbine Corporation (NASDAQ:CPST) is the most popular stock in this table with seven funds holding shares, while Energy Recovery, Inc. (NASDAQ:ERII) is the least popular one. RedHill Biopharma Ltd – ADR (NASDAQ:RDHL) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CPST might be a better candidate to consider a long position.