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Hedge Funds Have Never Been Less Bullish On Intra-Cellular Therapies Inc (ITCI)

We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Intra-Cellular Therapies Inc (NASDAQ:ITCI).

Intra-Cellular Therapies Inc (NASDAQ:ITCI) has experienced a decrease in enthusiasm from smart money in recent months. Our calculations also showed that ITCI isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 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.

Noam Gottesman GLG Partners

In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources  like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Now we’re going to review the key hedge fund action regarding Intra-Cellular Therapies Inc (NASDAQ:ITCI).

Hedge fund activity in Intra-Cellular Therapies Inc (NASDAQ:ITCI)

Heading into the third quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. On the other hand, there were a total of 18 hedge funds with a bullish position in ITCI a year ago. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

ITCI_nov2019

When looking at the institutional investors followed by Insider Monkey, Robert Pohly’s Samlyn Capital has the largest position in Intra-Cellular Therapies Inc (NASDAQ:ITCI), worth close to $13.4 million, amounting to 0.3% of its total 13F portfolio. The second most bullish fund manager is Columbus Circle Investors, led by Principal Global Investors, holding a $6.9 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other peers with similar optimism consist of D. E. Shaw’s D E Shaw, Ken Griffin’s Citadel Investment Group and Noam Gottesman’s GLG Partners.

Seeing as Intra-Cellular Therapies Inc (NASDAQ:ITCI) has experienced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there were a few money managers who sold off their positions entirely in the second quarter. At the top of the heap, Charles Clough’s Clough Capital Partners dropped the largest investment of the 750 funds monitored by Insider Monkey, comprising close to $1.6 million in call options. Steve Cohen’s fund, Point72 Asset Management, also dropped its call options, about $1.2 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 1 funds in the second quarter.

Let’s also examine hedge fund activity in other stocks similar to Intra-Cellular Therapies Inc (NASDAQ:ITCI). These stocks are Genfit SA (NASDAQ:GNFT), Univest Financial Corporation (NASDAQ:UVSP), Federal Agricultural Mortgage Corp. (NYSE:AGM), and TrustCo Bank Corp NY (NASDAQ:TRST). All of these stocks’ market caps are closest to ITCI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GNFT 6 46248 -4
UVSP 9 42023 0
AGM 7 29670 -2
TRST 12 46609 2
Average 8.5 41138 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $39 million in ITCI’s case. TrustCo Bank Corp NY (NASDAQ:TRST) is the most popular stock in this table. On the other hand Genfit SA (NASDAQ:GNFT) is the least popular one with only 6 bullish hedge fund positions. Intra-Cellular Therapies Inc (NASDAQ:ITCI) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately ITCI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ITCI were disappointed as the stock returned -42.4% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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

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