Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) was in 11 hedge funds’ portfolio at the end of the fourth quarter of 2012. ARNA investors should be aware of an increase in support from the world’s most elite money managers recently. There were 8 hedge funds in our database with ARNA positions at the end of the previous quarter.
At the moment, there are many metrics investors can use to track Mr. Market. A duo of the most useful are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite money managers can outclass the broader indices by a solid amount (see just how much).
Just as beneficial, bullish insider trading sentiment is another way to break down the stock market universe. There are many stimuli for an executive to downsize shares of his or her company, but just one, very obvious reason why they would buy. Various academic studies have demonstrated the valuable potential of this method if piggybackers understand where to look (learn more here).
With all of this in mind, let’s take a look at the latest action surrounding Arena Pharmaceuticals, Inc. (NASDAQ:ARNA).
Hedge fund activity in Arena Pharmaceuticals, Inc. (NASDAQ:ARNA)
At the end of the fourth quarter, a total of 11 of the hedge funds we track were long in this stock, a change of 38% from the third quarter. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings considerably.
Of the funds we track, Deerfield Management, managed by James E. Flynn, holds the most valuable position in Arena Pharmaceuticals, Inc. (NASDAQ:ARNA). Deerfield Management has a $67 million position in the stock, comprising 3.7% of its 13F portfolio. Sitting at the No. 2 spot is Daniel Gold of QVT Financial, with a $15 million position; the fund has 1% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Drew Cupps’s Cupps Capital Management, D. E. Shaw’s D E Shaw and Ken Griffin’s Citadel Investment Group.
As aggregate interest increased, key hedge funds have been driving this bullishness. Dialectic Capital Management, managed by John Fichthorn, established the most outsized position in Arena Pharmaceuticals, Inc. (NASDAQ:ARNA). Dialectic Capital Management had 1 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also initiated a $0 million position during the quarter. The other funds with brand new ARNA positions are Israel Englander’s Millennium Management and Gregory Fraser, Rudolph Kluiber, and Timothy Kroch’s GRT Capital Partners.
How have insiders been trading Arena Pharmaceuticals, Inc. (NASDAQ:ARNA)?
Insider trading activity, especially when it’s bullish, is best served when the company we’re looking at has seen transactions within the past 180 days. Over the latest six-month time frame, Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) has seen zero unique insiders buying, and 1 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Arena Pharmaceuticals, Inc. (NASDAQ:ARNA). These stocks are Charles River Laboratories (NYSE:CRL), Synageva BioPharma Corp (NASDAQ:GEVA), Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), Viropharma Inc (NASDAQ:VPHM), and Questcor Pharmaceuticals Inc (NASDAQ:QCOR). All of these stocks are in the biotechnology industry and their market caps are similar to ARNA’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Charles River Laboratories (NYSE:CRL)||20||0||7|
|Synageva BioPharma Corp (NASDAQ:GEVA)||6||3||5|
|Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY)||10||1||6|
|Viropharma Inc (NASDAQ:VPHM)||20||1||5|
|Questcor Pharmaceuticals Inc (NASDAQ:QCOR)||21||2||2|
With the returns shown by the aforementioned strategies, everyday investors must always monitor hedge fund and insider trading activity, and Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) applies perfectly to this mantra.