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Did Hedge Funds Make The Right Call On Amarin Corporation plc (AMRN) ?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtAmarin Corporation plc (NASDAQ:AMRN) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Amarin Corporation plc (NASDAQ:AMRN) has seen an increase in support from the world’s most elite money managers lately. Our calculations also showed that AMRN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Tim Lynch of Stonepine Capital

Timothy P. Lynch of Stonepine Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. Keeping this in mind let’s take a look at the latest hedge fund action surrounding Amarin Corporation plc (NASDAQ:AMRN).

How are hedge funds trading Amarin Corporation plc (NASDAQ:AMRN)?

At Q1’s end, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the previous quarter. On the other hand, there were a total of 26 hedge funds with a bullish position in AMRN a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Baker Bros. Advisors, managed by Julian Baker and Felix Baker, holds the largest position in Amarin Corporation plc (NASDAQ:AMRN). Baker Bros. Advisors has a $138 million position in the stock, comprising 0.8% of its 13F portfolio. Coming in second is Point72 Asset Management, led by Steve Cohen, holding a $36.9 million position; 0.3% of its 13F portfolio is allocated to the stock. Other peers that are bullish include Arthur B Cohen and Joseph Healey’s Healthcor Management LP, Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management and Farallon Capital. In terms of the portfolio weights assigned to each position Stonepine Capital allocated the biggest weight to Amarin Corporation plc (NASDAQ:AMRN), around 5.55% of its 13F portfolio. Eversept Partners is also relatively very bullish on the stock, dishing out 3.55 percent of its 13F equity portfolio to AMRN.

As aggregate interest increased, key hedge funds were leading the bulls’ herd. Renaissance Technologies, initiated the most valuable position in Amarin Corporation plc (NASDAQ:AMRN). Renaissance Technologies had $9.5 million invested in the company at the end of the quarter. Timothy P. Lynch’s Stonepine Capital also initiated a $5.3 million position during the quarter. The other funds with brand new AMRN positions are Henrik Rhenman’s Rhenman & Partners Asset Management, Michael Rockefeller and KarláKroeker’s Woodline Partners, and Bhagwan Jay Rao’s Integral Health Asset Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Amarin Corporation plc (NASDAQ:AMRN) but similarly valued. We will take a look at HB Fuller Co (NYSE:FUL), Columbia Property Trust Inc (NYSE:CXP), United Community Banks Inc (NASDAQ:UCBI), and SPX Corporation (NYSE:SPXC). This group of stocks’ market caps match AMRN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FUL 18 124227 4
CXP 17 50559 -5
UCBI 11 28692 -5
SPXC 14 47679 -5
Average 15 62789 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $328 million in AMRN’s case. HB Fuller Co (NYSE:FUL) is the most popular stock in this table. On the other hand United Community Banks Inc (NASDAQ:UCBI) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Amarin Corporation plc (NASDAQ:AMRN) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on AMRN as the stock returned 73% in Q2 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.