Do Hedge Funds Love Esperion Therapeutics (ESPR)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Esperion Therapeutics (NASDAQ:ESPR) based on that data and determine whether they were really smart about the stock.

Esperion Therapeutics (NASDAQ:ESPR) shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. Esperion Therapeutics (NASDAQ:ESPR) was in 19 hedge funds’ portfolios at the end of June. The all time high for this statistics is 22. There were 18 hedge funds in our database with ESPR holdings at the end of March. Our calculations also showed that ESPR isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. 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. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Now we’re going to view the recent hedge fund action surrounding Esperion Therapeutics (NASDAQ:ESPR).

Hedge fund activity in Esperion Therapeutics (NASDAQ:ESPR)

At the end of June, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. On the other hand, there were a total of 16 hedge funds with a bullish position in ESPR a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is ESPR A Good Stock To Buy?

The largest stake in Esperion Therapeutics (NASDAQ:ESPR) was held by Pentwater Capital Management, which reported holding $115.1 million worth of stock at the end of September. It was followed by Marshall Wace LLP with a $66.2 million position. Other investors bullish on the company included Platinum Asset Management, Millennium Management, and Rhenman & Partners Asset Management. In terms of the portfolio weights assigned to each position Rhenman & Partners Asset Management allocated the biggest weight to Esperion Therapeutics (NASDAQ:ESPR), around 2.36% of its 13F portfolio. Pentwater Capital Management is also relatively very bullish on the stock, setting aside 2.05 percent of its 13F equity portfolio to ESPR.

As industrywide interest jumped, key hedge funds have jumped into Esperion Therapeutics (NASDAQ:ESPR) headfirst. Endurant Capital Management, managed by Vishal Saluja and Pham Quang, assembled the biggest position in Esperion Therapeutics (NASDAQ:ESPR). Endurant Capital Management had $9.4 million invested in the company at the end of the quarter. Daniel S. Och’s OZ Management also made a $6.8 million investment in the stock during the quarter. The other funds with brand new ESPR positions are Greg Eisner’s Engineers Gate Manager, Minhua Zhang’s Weld Capital Management, and Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management.

Let’s also examine hedge fund activity in other stocks similar to Esperion Therapeutics (NASDAQ:ESPR). We will take a look at Innoviva, Inc. (NASDAQ:INVA), Portola Pharmaceuticals Inc (NASDAQ:PTLA), Sally Beauty Holdings, Inc. (NYSE:SBH), Glu Mobile Inc. (NASDAQ:GLUU), O-I Glass, Inc. (NYSE:OI), Sapiens International Corporation N.V. (NASDAQ:SPNS), and Cytokinetics, Inc. (NASDAQ:CYTK). This group of stocks’ market values are similar to ESPR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
INVA 19 293485 0
PTLA 26 419311 9
SBH 26 166191 7
GLUU 35 236410 17
OI 25 242769 -4
SPNS 6 43003 -4
CYTK 26 391206 4
Average 23.3 256054 4.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.3 hedge funds with bullish positions and the average amount invested in these stocks was $256 million. That figure was $324 million in ESPR’s case. Glu Mobile Inc. (NASDAQ:GLUU) is the most popular stock in this table. On the other hand Sapiens International Corporation N.V. (NASDAQ:SPNS) is the least popular one with only 6 bullish hedge fund positions. Esperion Therapeutics (NASDAQ:ESPR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ESPR is 54.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately ESPR wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); ESPR investors were disappointed as the stock returned -27.6% in the third 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.