Only a handful of people may know this, but there is a mutual fund that invests based on the 13D filings submitted with the U.S Securities and Exchange Commission. The mutual fund has proven to be quite successful over the years, having delivered yearly returns that significantly outperformed the broader market. Therefore, the Insider Monkey team pays close attention to the 13D and 13G filings of elite hedge funds, which might reveal some great trading opportunities pinpointed by reputable and successful hedge fund managers. Hence, the following article will discuss three such filings recently submitted by hedge fund firms tracked by our team.
Let’s first take a step back and analyze how tracking hedge funds can help an everyday investor. Through our research we discovered that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month on average between 1999 and 2012. On the other hand the most popular large-cap picks of hedge funds underperformed the same index by seven basis points per month during the same period. This is likely a surprise to many investors, who think of small-caps as risky, unpredictable stocks and put more faith (and money) in large-cap stocks. In forward tests since August 2012 these top small-cap stocks beat the market by an impressive 53 percentage points, returning 102% (read the details here). Follow the smart money into only their best investment ideas all while avoiding their high fees.
In a freshly-filed 13G with the SEC, Peter Kolchinsky’s RA Capital Management disclosed an ownership stake of 2.69 million shares in Strongbridge Biopharma plc (NASDAQ:SBBP), which account for 12.7% of the company’s outstanding shares. The biopharmaceutical company went public on October 16 through its initial public offering of 2.5 million ordinary shares at a price of $10.00. Strongbridge Biopharma plc (NASDAQ:SBBP) primarily focuses on the development, in-licensing, acquisition and potential commercialization of multiple products that target rare diseases such as endogenous Cushing’s syndrome and acromegaly. The company’s lead product candidate, COR-003 (levoketoconazole), is a Phase 3 cortisol synthesis inhibitor for the treatment of endogenous Cushing’s syndrome, which is a rare endocrine disorder characterized by sustained elevated cortisol levels. The company’s management has outlined a franchise-based business model that aims expansion through an in-licensing and acquisition strategy. The shares of Strongbridge Biopharma plc (NASDAQ:SBBP) are currently trading 24% below their IPO price, most probably as a result of the diminishing attractiveness of the biotech sector of late.
Let’s move on to the next page of the article, where we discuss the other two filings submitted with the SEC.