Hedge Funds Are Hoarding Shares Of Heron Therapeutics Inc (HRTX)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Heron Therapeutics Inc (NASDAQ:HRTX) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

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Is Heron Therapeutics Inc (NASDAQ:HRTX) the right pick for your portfolio? The smart money is getting more bullish. The number of bullish hedge fund positions increased by one in recent months. At the end of this article we will also compare HRTX to other stocks including iRobot Corporation (NASDAQ:IRBT), National HealthCare Corporation (NYSEAMEX:NHC), and Monotype Imaging Holdings Inc. (NASDAQ:TYPE) to get a better sense of its popularity.

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According to most investors, hedge funds are seen as slow, outdated financial tools of the past. While there are over 8,000 funds trading at present, experts at Insider Monkey, a website specializing in hedge funds, choose to focus on the upper echelon of this club, around 700 funds. These investment experts preside over the majority of the smart money’s total asset base, and by keeping track of their top investments, Insider Monkey has formulated a number of investment strategies that have historically outpaced the market. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per year for a decade in its backtests.

With all of this in mind, let’s take a look at the new action encompassing Heron Therapeutics Inc (NASDAQ:HRTX).

What have hedge funds been doing with Heron Therapeutics Inc (NASDAQ:HRTX)?

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish in this stock, up by 5% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully.

According to Insider Monkey’s hedge fund database, Tang Capital Management, managed by Kevin C. Tang, holds the number one position in Heron Therapeutics Inc (NASDAQ:HRTX). Tang Capital Management has a $126.7 million position in the stock, comprising 46.7% of its 13F portfolio. The second-largest stake is held by Christopher Medlock James of Partner Fund Management, with a $72.3 million position; the fund manager has 2% of his 13F portfolio invested in the stock. Some other hedgies that hold long positions consist of Julian Baker and Felix Baker’s Baker Bros. Advisors, Kevin Kotler’s Broadfin Capital, and Bihua Chen’s Cormorant Asset Management.

As aggregate interest increased, some big names have jumped into Heron Therapeutics Inc (NASDAQ:HRTX) headfirst. Broadfin Capital, managed by Kevin Kotler, created the biggest position of call options underlying shares of Heron Therapeutics Inc (NASDAQ:HRTX). Broadfin Capital had $12.2 million invested in the company at the end of the quarter. Hal Mintz’s Sabby Capital also made a $3.9 million investment in the stock during the quarter. The following funds were also among the new HRTX investors: Glenn Russell Dubin’s Highbridge Capital Management, Phill Gross and Robert Atchinson’s Adage Capital Management, and Ken Greenberg and David Kim’s Ghost Tree Capital.

Let’s also take a look at hedge fund activity in other stocks similar to Heron Therapeutics Inc (NASDAQ:HRTX). These stocks are iRobot Corporation (NASDAQ:IRBT), National HealthCare Corporation (NYSEAMEX:NHC), Monotype Imaging Holdings Inc. (NASDAQ:TYPE), and Denbury Resources Inc. (NYSE:DNR). This group of stocks’ market valuations are closest to HRTX’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IRBT 10 68184 -3
NHC 8 20626 2
TYPE 13 89795 1
DNR 19 69956 2

As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $62 million, while in Heron Therapeutics, that figure was $479 million. Denbury Resources Inc. (NYSE:DNR) is the most popular stock in this table. On the other hand National HealthCare Corporation (NYSEAMEX:NHC) is the least popular one with only eight bullish hedge fund positions. Compared to these stocks Heron Therapeutics Inc (NASDAQ:HRTX) is more popular among hedge funds. Considering that hedge funds are very fond of this stock in relation to its market cap peers, owning 55% of its shares, it may be a good idea to analyze it in detail and potentially include it in your portfolio.