Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Esperion Therapeutics, Inc. (NASDAQ:ESPR).
Is Esperion Therapeutics, Inc. (NASDAQ:ESPR) a great investment right now? The best stock pickers are becoming more confident. The number of long hedge fund positions increased by 3 in recent months. Our calculations also showed that ESPR isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to analyze the fresh hedge fund action regarding Esperion Therapeutics, Inc. (NASDAQ:ESPR).
How have hedgies been trading Esperion Therapeutics, Inc. (NASDAQ:ESPR)?
At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in ESPR a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, Pentwater Capital Management was the largest shareholder of Esperion Therapeutics, Inc. (NASDAQ:ESPR), with a stake worth $72.9 million reported as of the end of September. Trailing Pentwater Capital Management was Marshall Wace LLP, which amassed a stake valued at $41.7 million. Platinum Asset Management, Rhenman & Partners Asset Management, and Balyasny Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Rhenman & Partners Asset Management allocated the biggest weight to Esperion Therapeutics, Inc. (NASDAQ:ESPR), around 2.62% of its 13F portfolio. Pentwater Capital Management is also relatively very bullish on the stock, earmarking 1.2 percent of its 13F equity portfolio to ESPR.
Consequently, key hedge funds were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most valuable position in Esperion Therapeutics, Inc. (NASDAQ:ESPR). Marshall Wace LLP had $41.7 million invested in the company at the end of the quarter. Henrik Rhenman’s Rhenman & Partners Asset Management also initiated a $18.7 million position during the quarter. The other funds with brand new ESPR positions are Phill Gross and Robert Atchinson’s Adage Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management.
Let’s check out hedge fund activity in other stocks similar to Esperion Therapeutics, Inc. (NASDAQ:ESPR). These stocks are Dillard’s, Inc. (NYSE:DDS), Diversified Healthcare Trust (NASDAQ:DHC), KKR Real Estate Finance Trust Inc. (NYSE:KREF), and SunPower Corporation (NASDAQ:SPWR). This group of stocks’ market valuations are closest to ESPR’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $191 million in ESPR’s case. SunPower Corporation (NASDAQ:SPWR) is the most popular stock in this table. On the other hand KKR Real Estate Finance Trust Inc. (NYSE:KREF) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Esperion Therapeutics, Inc. (NASDAQ:ESPR) is more popular among hedge funds. 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 returned 13.4% in 2020 through June 22nd but still managed to beat the market by 15.9 percentage points. Hedge funds were also right about betting on ESPR as the stock returned 49% so far in Q2 (through June 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.