Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Keryx Biopharmaceuticals Inc (NASDAQ:KERX) .
Is Keryx Biopharmaceuticals Inc (NASDAQ:KERX) ready to rally soon? The best stock pickers are altogether actually turning less bullish. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings slashed by 1 recently. KERX was in 11 hedge funds’ portfolios at the end of the third quarter of 2016. There were 11 hedge funds in our database with KERX positions at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Aceto Corporation (NASDAQ:ACET), FTD Companies Inc (NASDAQ:FTD), and Sodastream International Ltd (NASDAQ:SODA) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
With all of this in mind, we’re going to take a peek at the new action surrounding Keryx Biopharmaceuticals Inc (NASDAQ:KERX).
Hedge fund activity in Keryx Biopharmaceuticals Inc (NASDAQ:KERX)
Heading into the fourth quarter of 2016, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 8% from the previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in KERX at the beginning of this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Baupost Group, led by Seth Klarman, holds the number one position in Keryx Biopharmaceuticals Inc (NASDAQ:KERX). Baupost Group has a $137 million position in the stock, comprising 1.9% of its 13F portfolio. Coming in second is David Abrams of Abrams Capital Management, with a $30.4 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Chuck Royce’s mutual fund Royce & Associates, Millennium Management, one of the 10 largest hedge funds in the world, and Andre F. Perold’s HighVista Strategies. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Since Keryx Biopharmaceuticals Inc (NASDAQ:KERX) has faced a bearish sentiment from hedge fund managers, we can see that there exists a select few hedge funds that decided to sell off their positions entirely heading into Q4. It’s worth mentioning that Ken Griffin’s Citadel Investment Group cashed in the biggest position of all the investors monitored by Insider Monkey, worth about $1.1 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dropped about $0.7 million worth of shares.
Let’s check out hedge fund activity in other stocks similar to Keryx Biopharmaceuticals Inc (NASDAQ:KERX). These stocks are Aceto Corporation (NASDAQ:ACET), FTD Companies Inc (NASDAQ:FTD), Sodastream International Ltd (NASDAQ:SODA), and Schnitzer Steel Industries, Inc. (NASDAQ:SCHN). This group of stocks’ market values are closest to KERX’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $174 million in KERX’s case. Sodastream International Ltd (NASDAQ:SODA) is the most popular stock in this table. On the other hand Aceto Corporation (NASDAQ:ACET) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Keryx Biopharmaceuticals Inc (NASDAQ:KERX) is even less popular than ACET. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.