Most equity investments made by hedge funds are based on strong reasoning and comprehensive analysis, so these investment vehicles do not make blind bets without laying out the reasoning behind each move. Truth be told, I am still impressed by Jeffrey Ubben’s decision to invest in Adobe Systems Incorporated (NASDAQ:ADBE) at the end of 2011. The billionaire investor made a well-thought-out investment and many successful money managers tend to share similar investment ideas and strategies, so individual investors should constantly examine hedge funds’ investment ideas and quarterly letters to investors (if one has the ability to gain access to them; we share as many of them as we can here at Insider Monkey). It is true that their ideas do not work out on some occasions, for various reasons, but one can complement his or her knowledge about a company by taking a glimpse into the minds of the world’s most successful money managers. Having this in mind, the following article will focus on four new filings from billionaire Dmitry Balyasny and other successful hedge fund managers tracked by Insider Monkey.
An everyday investor doesn’t have the same resources and capabilities to analyze different publicly-traded companies as hedge funds do. This is why it is a good idea to see what stocks hedge funds like the most and try to imitate some of their bullish moves in an attempt to reap market-beating returns. At Insider Monkey, we follow the activity of several hundred of the best-performing hedge funds as part of our strategy. We analyze their 13F filings and use the data to see what stocks they are collectively bullish on. Through extensive research we have determined that the best approach to outperform the broader indices is to follow hedge funds into their top small-cap ideas. In our backtests, a portfolio of the 15 most popular small-cap stocks generated monthly alpha of 81 basis points, versus 0.7 percentage points posted by hedge funds’ top large- and mega-cap picks (see more details here).
As revealed by a Form 4 filing, Baker Bros. Advisors, managed by Julian Baker and Felix Baker, has acquired 140,786 shares of Aquinox Pharmaceuticals Inc. (NASDAQ:AQXP) since last Friday, at prices that ranged from $10.49 per share to $11.25 per share. The healthcare-focused hedge fund firm currently holds 7.28 million shares of the company, which account for 42.30% of its outstanding shares. The clinical stage pharmaceutical company focuses on developing therapeutics for inflammation and immune-oncology diseases, with a primary focus on anti-inflammatory products. The company’s lead product candidate is AQX-1125, which accelerates a natural mechanism that has evolved to maintain homeostasis of the immune system and hinder immune cell activation and migration to sites of inflammation. Earlier this month, Aquinox Pharmaceuticals Inc. (NASDAQ:AQXP) released an update regarding the development of its lead product candidate for the treatment of patients with bladder pain syndrome/interstitial cystitis (BPS/IC), suggesting that the company is on track to complete all the tasks required to support its planned Phase 3 protocol submission to the FDA in the second quarter of 2016. The shares of the company have lost slightly over 1% over the past year and have lost 28% over the past three months, so the healthcare-focused investment firm might have found the stock quite attractive in recent weeks. A total of 13 hedge funds from our system were invested in the pharmaceutical company at the end of the third quarter, amassing 63.20% of its shares, making it one of the stocks with the highest concentration of ownership among the investors that we track. Peter Kolchinsky’s RA Capital Management acquired a 1.53 million-share stake in Aquinox Pharmaceuticals Inc. (NASDAQ:AQXP) during the third quarter.
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Let’s head to the next pages of this article, where we discuss the remaining three filings submitted with the SEC.