Is Insmed Incorporated (NASDAQ:INSM) a first-rate stock to buy now? The smart money is getting more bullish. The number of long hedge fund bets rose by 2 recently.
To most investors, hedge funds are perceived as worthless, old financial tools of the past. While there are more than 8000 funds trading at the moment, we hone in on the moguls of this group, about 450 funds. Most estimates calculate that this group oversees the lion’s share of the smart money’s total asset base, and by keeping an eye on their best picks, we have identified a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum 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 trumped the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).
Just as important, optimistic insider trading sentiment is a second way to parse down the world of equities. As the old adage goes: there are a variety of reasons for an executive to get rid of shares of his or her company, but just one, very simple reason why they would buy. Various academic studies have demonstrated the useful potential of this tactic if shareholders understand where to look (learn more here).
Consequently, we’re going to take a glance at the latest action surrounding Insmed Incorporated (NASDAQ:INSM).
What does the smart money think about Insmed Incorporated (NASDAQ:INSM)?
In preparation for this year, a total of 8 of the hedge funds we track held long positions in this stock, a change of 33% from the third quarter. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings substantially.
When looking at the hedgies we track, Peter Kolchinsky’s RA Capital Management had the most valuable position in Insmed Incorporated (NASDAQ:INSM), worth close to $16 million, comprising 5.7% of its total 13F portfolio. The second largest stake is held by Ayer Capital Management, managed by Jay Venkatesen, which held a $10 million position; the fund has 5.2% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Kevin Kotler’s Broadfin Capital, William Leland Edwards’s Palo Alto Investors and Julian Baker and Felix Baker’s Baker Bros. Advisors.
As one would reasonably expect, key money managers have jumped into Insmed Incorporated (NASDAQ:INSM) headfirst. Broadfin Capital, managed by Kevin Kotler, established the largest position in Insmed Incorporated (NASDAQ:INSM). Broadfin Capital had 2 million invested in the company at the end of the quarter. Julian Baker and Felix Baker’s Baker Bros. Advisors also initiated a $2 million position during the quarter. The only other fund with a new position in the stock is John Overdeck and David Siegel’s Two Sigma Advisors.
How are insiders trading Insmed Incorporated (NASDAQ:INSM)?
Insider purchases made by high-level executives is at its handiest when the primary stock in question has seen transactions within the past six months. Over the last six-month time frame, Insmed Incorporated (NASDAQ:INSM) has seen 1 unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Insmed Incorporated (NASDAQ:INSM). These stocks are Threshold Pharmaceuticals, Inc. (NASDAQ:THLD), Repligen Corporation (NASDAQ:RGEN), Coronado Biosciences Inc (NASDAQ:CNDO), Amyris Inc (NASDAQ:AMRS), and Anacor Pharmaceuticals Inc (NASDAQ:ANAC). All of these stocks are in the biotechnology industry and their market caps are closest to INSM’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Threshold Pharmaceuticals, Inc. (NASDAQ:THLD) | 14 | 0 | 1 |
| Repligen Corporation (NASDAQ:RGEN) | 4 | 0 | 1 |
| Coronado Biosciences Inc (NASDAQ:CNDO) | 4 | 3 | 0 |
| Amyris Inc (NASDAQ:AMRS) | 3 | 3 | 0 |
| Anacor Pharmaceuticals Inc (NASDAQ:ANAC) | 11 | 0 | 2 |
With the results exhibited by the aforementioned tactics, retail investors should always watch hedge fund and insider trading sentiment, and Insmed Incorporated (NASDAQ:INSM) shareholders fit into this picture quite nicely.
