Is Discovery Laboratories, Inc. (NASDAQ:DSCO) the right pick for your portfolio? Hedge funds are becoming less confident. The number of long hedge fund positions stayed the same which is a slightly negative development in our experience
At the moment, there are dozens of metrics market participants can use to analyze their holdings. Two of the best are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite fund managers can trounce the S&P 500 by a healthy margin (see just how much).
Equally as beneficial, positive insider trading sentiment is a second way to parse down the marketplace. As the old adage goes: there are plenty of motivations for a bullish insider to downsize shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the impressive potential of this method if you know where to look (learn more here).
With these “truths” under our belt, let’s take a peek at the key action encompassing Discovery Laboratories, Inc. (NASDAQ:DSCO).
What does the smart money think about Discovery Laboratories, Inc. (NASDAQ:DSCO)?
At the end of the fourth quarter, a total of 7 of the hedge funds we track were long in this stock, a change of 0% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably.
Of the funds we track, Julian Baker and Felix Baker’s Baker Bros. Advisors had the most valuable position in Discovery Laboratories, Inc. (NASDAQ:DSCO), worth close to $1.8 million, comprising less than 0.1%% of its total 13F portfolio. Coming in second is D. E. Shaw of D E Shaw, with a $1.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Richard Driehaus’s Driehaus Capital, Nathan Fischel’s DAFNA Capital Management and Anand Parekh’s Alyeska Investment Group.
Due to the fact that Discovery Laboratories, Inc. (NASDAQ:DSCO) has experienced a declination in interest from hedge fund managers, it’s safe to say that there was a specific group of hedge funds that slashed their entire stakes heading into 2013. Intriguingly, Israel Englander’s Millennium Management dropped the largest investment of the 450+ funds we key on, valued at close to $0.4 million in stock., and Sander Gerber of Hudson Bay Capital Management was right behind this move, as the fund dropped about $0.1 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
What do corporate executives and insiders think about Discovery Laboratories, Inc. (NASDAQ:DSCO)?
Insider buying is best served when the primary stock in question has seen transactions within the past half-year. Over the latest six-month time period, Discovery Laboratories, Inc. (NASDAQ:DSCO) has seen 1 unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Discovery Laboratories, Inc. (NASDAQ:DSCO). These stocks are Vanda Pharmaceuticals Inc. (NASDAQ:VNDA), Complete Genomics, Inc. (NASDAQ:GNOM), BioSpecifics Technologies Corp. (NASDAQ:BSTC), Inovio Pharmaceuticals Inc (NYSEAMEX:INO), and Omeros Corporation (NASDAQ:OMER). This group of stocks are in the biotechnology industry and their market caps are similar to DSCO’s market cap.