Is VIVUS, Inc. (NASDAQ:VVUS) a buy right now? Investors who are in the know are taking a bearish view. The number of bullish hedge fund bets stayed the same which is a slightly negative development in our experience
In the 21st century investor’s toolkit, there are a multitude of gauges investors can use to track stocks. Two of the most underrated are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top investment managers can beat the market by a very impressive amount (see just how much).
Just as important, bullish insider trading sentiment is a second way to break down the financial markets. As the old adage goes: there are a number of incentives for a corporate insider to get rid of shares of his or her company, but only one, very obvious reason why they would buy. Various academic studies have demonstrated the impressive potential of this strategy if investors know where to look (learn more here).
Keeping this in mind, let’s take a glance at the latest action encompassing VIVUS, Inc. (NASDAQ:VVUS).
How have hedgies been trading VIVUS, Inc. (NASDAQ:VVUS)?
In preparation for this year, a total of 19 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes considerably.
According to our comprehensive database, Passport Capital, managed by John Burbank, holds the biggest position in VIVUS, Inc. (NASDAQ:VVUS). Passport Capital has a $120 million position in the stock, comprising 4.6% of its 13F portfolio. On Passport Capital’s heels is Daniel Gold of QVT Financial, with a $112 million position; 1.3% of its 13F portfolio is allocated to the stock. Other peers that are bullish include Richard Chilton’s Chilton Investment Company, and Kyle Bass’s Hayman Advisors.
Seeing as VIVUS, Inc. (NASDAQ:VVUS) has experienced declining sentiment from the smart money, we can see that there is a sect of money managers who sold off their positions entirely at the end of the year. It’s worth mentioning that Bruce Kovner’s Caxton Associates LP sold off the biggest stake of the 450+ funds we watch, worth an estimated $28 million in stock., and Phill Gross and Robert Atchinson of Adage Capital Management was right behind this move, as the fund dumped about $14 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
What have insiders been doing with VIVUS, Inc. (NASDAQ:VVUS)?
Bullish insider trading is most useful when the company we’re looking at has experienced transactions within the past 180 days. Over the last 180-day time period, VIVUS, Inc. (NASDAQ:VVUS) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
With the returns demonstrated by our studies, everyday investors should always keep an eye on hedge fund and insider trading activity, and VIVUS, Inc. (NASDAQ:VVUS) is no exception.
Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.