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Do Hedge Funds Love Collegium Pharmaceutical Inc (COLL)?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors endured a torrid quarter, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Collegium Pharmaceutical Inc (NASDAQ:COLL).

Collegium Pharmaceutical Inc (NASDAQ:COLL) was in 15 hedge funds’ portfolios at the end of September. COLL has experienced a decrease in enthusiasm from smart money of late. There were 17 hedge funds in our database with COLL holdings at the end of the previous quarter. Our calculations also showed that coll isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Lee Ainslie MAVERICK CAPITAL

Let’s take a gander at the key hedge fund action encompassing Collegium Pharmaceutical Inc (NASDAQ:COLL).

What have hedge funds been doing with Collegium Pharmaceutical Inc (NASDAQ:COLL)?

At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in COLL over the last 13 quarters. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

No of Hedge Funds with COLL Positions

According to Insider Monkey’s hedge fund database, Sectoral Asset Management, managed by Jerome Pfund and Michael Sjostrom, holds the number one position in Collegium Pharmaceutical Inc (NASDAQ:COLL). Sectoral Asset Management has a $29.3 million position in the stock, comprising 3.1% of its 13F portfolio. On Sectoral Asset Management’s heels is Frazier Healthcare Partners, led by Alan Frazier, holding a $27.8 million position; the fund has 5.1% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish contain Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management, Lee Ainslie’s Maverick Capital and James Dondero’s Highland Capital Management.

Judging by the fact that Collegium Pharmaceutical Inc (NASDAQ:COLL) has experienced a decline in interest from hedge fund managers, it’s safe to say that there exists a select few money managers that decided to sell off their positions entirely last quarter. At the top of the heap, John Osterweis’s Osterweis Capital Management cut the biggest stake of the “upper crust” of funds tracked by Insider Monkey, totaling about $5.4 million in stock, and Chuck Royce’s Royce & Associates was right behind this move, as the fund said goodbye to about $3.3 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 2 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Collegium Pharmaceutical Inc (NASDAQ:COLL) but similarly valued. These stocks are pdvWireless Inc (NASDAQ:PDVW), Clearwater Paper Corp (NYSE:CLW), Ultra Clean Holdings Inc (NASDAQ:UCTT), and TORM plc (NASDAQ:TRMD). This group of stocks’ market valuations resemble COLL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PDVW 9 227471 0
CLW 10 25615 3
UCTT 8 27515 -2
TRMD 2 313766 1
Average 7.25 148592 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $149 million. That figure was $104 million in COLL’s case. Clearwater Paper Corp (NYSE:CLW) is the most popular stock in this table. On the other hand TORM plc (NASDAQ:TRMD) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Collegium Pharmaceutical Inc (NASDAQ:COLL) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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

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