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Did Hedge Funds Make The Right Call On Antares Pharma Inc (ATRS)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Antares Pharma Inc (NASDAQ:ATRS) and determine whether hedge funds skillfully traded this stock.

Is Antares Pharma Inc (NASDAQ:ATRS) the right investment to pursue these days? The best stock pickers were in an optimistic mood. The number of long hedge fund bets inched up by 7 lately. Our calculations also showed that ATRS 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Tim Lynch of Stonepine Capital

Tim Lynch of Stonepine Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind let’s take a gander at the new hedge fund action regarding Antares Pharma Inc (NASDAQ:ATRS).

Hedge fund activity in Antares Pharma Inc (NASDAQ:ATRS)

Heading into the second quarter of 2020, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 54% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ATRS over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

The largest stake in Antares Pharma Inc (NASDAQ:ATRS) was held by Two Sigma Advisors, which reported holding $3.7 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $3.2 million position. Other investors bullish on the company included Millennium Management, Intrinsic Edge Capital, and Soleus Capital. In terms of the portfolio weights assigned to each position Soleus Capital allocated the biggest weight to Antares Pharma Inc (NASDAQ:ATRS), around 2.37% of its 13F portfolio. Healthcare Value Capital is also relatively very bullish on the stock, dishing out 1.98 percent of its 13F equity portfolio to ATRS.

With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Intrinsic Edge Capital, managed by Mark Coe, created the most outsized position in Antares Pharma Inc (NASDAQ:ATRS). Intrinsic Edge Capital had $2.4 million invested in the company at the end of the quarter. Guy Levy’s Soleus Capital also made a $2 million investment in the stock during the quarter. The other funds with new positions in the stock are Greg Eisner’s Engineers Gate Manager, Timothy P. Lynch’s Stonepine Capital, and Alec Litowitz and Ross Laser’s Magnetar Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Antares Pharma Inc (NASDAQ:ATRS) but similarly valued. These stocks are VirnetX Holding Corporation (NYSE:VHC), Donegal Group, Inc. (NASDAQ:DGICB), Celestica Inc. (NYSE:CLS), and Global Cord Blood Corp (NYSE:CO). All of these stocks’ market caps are closest to ATRS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VHC 3 819 2
DGICB 1 312 0
CLS 15 48453 2
CO 13 18445 1
Average 8 17007 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $23 million in ATRS’s case. Celestica Inc. (NYSE:CLS) is the most popular stock in this table. On the other hand Donegal Group, Inc. (NASDAQ:DGICB) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Antares Pharma Inc (NASDAQ:ATRS) 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 gained 18.6% in 2020 through July 27th and still beat the market by 17.1 percentage points. Unfortunately ATRS wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ATRS were disappointed as the stock returned 13.6% since the end of the first quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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