Is ACADIA Pharmaceuticals (ACAD) Stock A Buy or Sell?

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 at Insider Monkey have plowed through 887 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD).

Is ACADIA Pharmaceuticals (ACAD) stock a buy or sell? The best stock pickers were cutting their exposure. The number of long hedge fund positions went down by 3 lately. ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) was in 38 hedge funds’ portfolios at the end of December. The all time high for this statistic is 44. Our calculations also showed that ACAD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 41 hedge funds in our database with ACAD positions at the end of the third quarter.

Felix Baker - Baker Bros.

Felix Baker of Baker Bros.

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Do Hedge Funds Think ACAD Is A Good Stock To Buy Now?

At Q4’s end, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from one quarter earlier. By comparison, 34 hedge funds held shares or bullish call options in ACAD a year ago. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

The largest stake in ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) was held by Baker Bros. Advisors, which reported holding $2240.2 million worth of stock at the end of December. It was followed by Palo Alto Investors with a $123 million position. Other investors bullish on the company included D E Shaw, Avoro Capital Advisors (venBio Select Advisor), and Rock Springs Capital Management. In terms of the portfolio weights assigned to each position Baker Bros. Advisors allocated the biggest weight to ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), around 8.44% of its 13F portfolio. Palo Alto Investors is also relatively very bullish on the stock, setting aside 6.45 percent of its 13F equity portfolio to ACAD.

Judging by the fact that ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers who sold off their entire stakes by the end of the fourth quarter. Interestingly, Hal Mintz’s Sabby Capital dropped the largest investment of all the hedgies tracked by Insider Monkey, worth about $4.1 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund said goodbye to about $2.8 million worth. These moves are interesting, as total hedge fund interest fell by 3 funds by the end of the fourth quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) but similarly valued. These stocks are Chemed Corporation (NYSE:CHE), Natera Inc (NASDAQ:NTRA), Iron Mountain Incorporated (NYSE:IRM), Service Corporation International (NYSE:SCI), Smartsheet Inc. (NYSE:SMAR), Ozon Holdings PLC (NASDAQ:OZON), and RenaissanceRe Holdings Ltd. (NYSE:RNR). This group of stocks’ market valuations resemble ACAD’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CHE 31 428254 -3
NTRA 46 1175008 3
IRM 18 64778 -7
SCI 28 814855 -2
SMAR 45 1723390 0
OZON 21 150922 21
RNR 39 669309 2
Average 32.6 718074 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.6 hedge funds with bullish positions and the average amount invested in these stocks was $718 million. That figure was $3081 million in ACAD’s case. Natera Inc (NASDAQ:NTRA) is the most popular stock in this table. On the other hand Iron Mountain Incorporated (NYSE:IRM) is the least popular one with only 18 bullish hedge fund positions. ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ACAD is 63.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and beat the market again by 0.8 percentage points. Unfortunately ACAD wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on ACAD were disappointed as the stock returned -48.1% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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