Is Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) a buy here? Prominent investors are taking a bullish view. The number of bullish hedge fund bets inched up by 2 in recent months.
According to most traders, hedge funds are perceived as underperforming, outdated investment vehicles of yesteryear. While there are greater than 8000 funds with their doors open at the moment, we look at the leaders of this group, about 450 funds. It is estimated that this group has its hands on most of all hedge funds’ total capital, and by watching their best stock picks, we have uncovered a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 25 percentage points in 6.5 month (see the details here).
Equally as key, positive insider trading sentiment is a second way to parse down the investments you’re interested in. There are many reasons for a corporate insider to drop shares of his or her company, but just one, very simple reason why they would behave bullishly. Several academic studies have demonstrated the useful potential of this strategy if you know where to look (learn more here).
Now, let’s take a peek at the key action encompassing Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI).
Hedge fund activity in Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI)
At year’s end, a total of 13 of the hedge funds we track were long in this stock, a change of 18% from the third quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly.
Of the funds we track, Julian Baker and Felix Baker’s Baker Bros. Advisors had the largest position in Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI), worth close to $17 million, accounting for 0.4% of its total 13F portfolio. On Baker Bros. Advisors’s heels is D E Shaw, managed by D. E. Shaw, which held a $7 million position; the fund has 0% of its 13F portfolio invested in the stock. Other hedgies with similar optimism include Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, Sean Cullinan’s Point State Capital and Robert B. Gillam’s McKinley Capital Management.
As industrywide interest jumped, specific money managers have jumped into Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) headfirst. D E Shaw, managed by D. E. Shaw, assembled the most outsized position in Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI). D E Shaw had 7 million invested in the company at the end of the quarter. Sean Cullinan’s Point State Capital also made a $4 million investment in the stock during the quarter. The other funds with new positions in the stock are Joseph Edelman’s Perceptive Advisors, John Overdeck and David Siegel’s Two Sigma Advisors, and Jacob Gottlieb’s Visium Asset Management.
How are insiders trading Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI)?
Insider purchases made by high-level executives is at its handiest when the company in focus has experienced transactions within the past six months. Over the last 180-day time frame, Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) has seen 1 unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI). These stocks are Emergent Biosolutions Inc (NYSE:EBS), Sequenom, Inc. (NASDAQ:SQNM), Idenix Pharmaceuticals Inc (NASDAQ:IDIX), Dyax Corp. (NASDAQ:DYAX), and QLT Inc. (USA) (NASDAQ:QLTI). This group of stocks are the members of the biotechnology industry and their market caps resemble SPPI’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Emergent Biosolutions Inc (NYSE:EBS)||17||0||1|
|Sequenom, Inc. (NASDAQ:SQNM)||15||2||0|
|Idenix Pharmaceuticals Inc (NASDAQ:IDIX)||17||0||0|
|Dyax Corp. (NASDAQ:DYAX)||11||0||3|
|QLT Inc. (USA) (NASDAQ:QLTI)||16||0||1|
With the results shown by the aforementioned research, retail investors must always keep an eye on hedge fund and insider trading sentiment, and Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) is no exception.
Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.