Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
NERV has seen a decrease in hedge fund interest in recent months. There were 11 hedge funds in our database with NERV holdings at the end of September. At the end of this article we will also compare NERV to other stocks including Trupanion Inc (NYSE:TRUP), Camden National Corporation (NASDAQ:CAC), and ArcBest Corp (NASDAQ:ARCB) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Keeping this in mind, let’s review the fresh action regarding Minerva Neurosciences Inc (NASDAQ:NERV).
How are hedge funds trading Minerva Neurosciences Inc (NASDAQ:NERV)?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -31% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in NERV at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Cormorant Asset Management, led by Bihua Chen, holds the largest position in Minerva Neurosciences Inc (NASDAQ:NERV). Cormorant Asset Management has a $39.5 million position in the stock, comprising 4.4% of its 13F portfolio. On Cormorant Asset Management’s heels is Highland Capital Management, led by James Dondero, holding a $18.7 million position; 0.6% of its 13F portfolio is allocated to the company. Some other professional money managers with similar optimism consist of Millennium Management, one of the 10 largest hedge funds in the world, Joseph Edelman’s Perceptive Advisors and Samuel Isaly’s OrbiMed Advisors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually said goodbye to their positions entirely. At the top of the heap, Ori Hershkovitz’s Nexthera Capital said goodbye to the biggest stake of all the hedgies tracked by Insider Monkey, valued at an estimated $1.1 million in stock. D E Shaw, also dropped its stock, about $0.5 million worth.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Minerva Neurosciences Inc (NASDAQ:NERV) but similarly valued. These stocks are Trupanion Inc (NYSE:TRUP), Camden National Corporation (NASDAQ:CAC), ArcBest Corp (NASDAQ:ARCB), and PJT Partners Inc (NYSE:PJT). This group of stocks’ market caps are closest to NERV’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $106 million in NERV’s case. ArcBest Corp (NASDAQ:ARCB) is the most popular stock in this table. On the other hand Camden National Corporation (NASDAQ:CAC) is the least popular one with only 6 bullish hedge fund positions. Minerva Neurosciences Inc (NASDAQ:NERV) 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 ARCB might be a better candidate to consider taking a long position in.