Hedge Funds Are Buying PDL BioPharma Inc. (PDLI)

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 30 S&P 500 stocks among hedge funds at the end of September 2018 returned an average of 6.7% through November 15th whereas the S&P 500 Index ETF gained only 2.6% during the same period. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at PDL BioPharma Inc. (NASDAQ:PDLI) from the perspective of those elite funds.

Is PDL BioPharma Inc. (NASDAQ:PDLI) a worthy stock to buy now? Prominent investors are buying. The number of long hedge fund bets advanced by 2 lately. Our calculations also showed that pdli isn’t among the 30 most popular stocks among hedge funds.

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 flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.


Cliff Asness of AQR Capital Management

We’re going to check out the key hedge fund action surrounding PDL BioPharma Inc. (NASDAQ:PDLI).

How are hedge funds trading PDL BioPharma Inc. (NASDAQ:PDLI)?

At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in PDLI at the beginning of this year. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

No of Hedge Funds with PDLI Positions

Among these funds, Renaissance Technologies held the most valuable stake in PDL BioPharma Inc. (NASDAQ:PDLI), which was worth $24.1 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $11.6 million worth of shares. Moreover, AQR Capital Management, D E Shaw, and Armistice Capital were also bullish on PDL BioPharma Inc. (NASDAQ:PDLI), allocating a large percentage of their portfolios to this stock.

As one would reasonably expect, key money managers were leading the bulls’ herd. Armistice Capital, managed by Steven Boyd, initiated the most outsized position in PDL BioPharma Inc. (NASDAQ:PDLI). Armistice Capital had $4.7 million invested in the company at the end of the quarter. Frederick DiSanto’s Ancora Advisors also made a $0.7 million investment in the stock during the quarter. The following funds were also among the new PDLI investors: Michael Platt and William Reeves’s BlueCrest Capital Mgmt. and Paul Tudor Jones’s Tudor Investment Corp.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as PDL BioPharma Inc. (NASDAQ:PDLI) but similarly valued. We will take a look at KalVista Pharmaceuticals, Inc. (NASDAQ:KALV), Hexindai Inc. (NASDAQ:HX), Natural Resource Partners LP (NYSE:NRP), and RR Donnelley & Sons Company (NYSE:RRD). This group of stocks’ market valuations are similar to PDLI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KALV 12 83702 8
HX 4 1330 3
NRP 5 4713 1
RRD 15 24582 1
Average 9 28582 3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $60 million in PDLI’s case. RR Donnelley & Sons Company (NYSE:RRD) is the most popular stock in this table. On the other hand Hexindai Inc. (NASDAQ:HX) is the least popular one with only 4 bullish hedge fund positions. PDL BioPharma Inc. (NASDAQ:PDLI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard RRD might be a better candidate to consider a long position.

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