At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Acorda Therapeutics Inc (NASDAQ:ACOR).
Is ACOR a good stock to buy now? Money managers were becoming less confident. The number of long hedge fund positions retreated by 6 lately. Acorda Therapeutics Inc (NASDAQ:ACOR) was in 7 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 26. Our calculations also showed that ACOR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let’s take a look at the fresh hedge fund action encompassing Acorda Therapeutics Inc (NASDAQ:ACOR).
What have hedge funds been doing with Acorda Therapeutics Inc (NASDAQ:ACOR)?
At the end of September, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -46% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ACOR over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Acorda Therapeutics Inc (NASDAQ:ACOR), with a stake worth $2 million reported as of the end of September. Trailing Renaissance Technologies was Point72 Asset Management, which amassed a stake valued at $1 million. Arrowstreet Capital, Citadel Investment Group, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Point72 Asset Management allocated the biggest weight to Acorda Therapeutics Inc (NASDAQ:ACOR), around 0.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.002 percent of its 13F equity portfolio to ACOR.
Seeing as Acorda Therapeutics Inc (NASDAQ:ACOR) has faced a decline in interest from the smart money, we can see that there is a sect of money managers that slashed their entire stakes in the third quarter. At the top of the heap, Cliff Asness’s AQR Capital Management dropped the biggest stake of all the hedgies watched by Insider Monkey, valued at close to $0.7 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also dropped its stock, about $0.4 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 6 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Acorda Therapeutics Inc (NASDAQ:ACOR). These stocks are Aptevo Therapeutics Inc. (NASDAQ:APVO), Abraxas Petroleum Corp. (NASDAQ:AXAS), Alimera Sciences Inc (NASDAQ:ALIM), Salem Media Group Inc. (NASDAQ:SALM), Psychemedics Corp. (NASDAQ:PMD), J. Jill, Inc. (NYSE:JILL), and Midatech Pharma PLC (NASDAQ:MTP). All of these stocks’ market caps are similar to ACOR’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.3 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $3 million in ACOR’s case. Alimera Sciences Inc (NASDAQ:ALIM) is the most popular stock in this table. On the other hand Midatech Pharma PLC (NASDAQ:MTP) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Acorda Therapeutics Inc (NASDAQ:ACOR) is more popular among hedge funds. Our overall hedge fund sentiment score for ACOR is 57.1. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 31.6% in 2020 through December 2nd but still managed to beat the market by 16 percentage points. Hedge funds were also right about betting on ACOR as the stock returned 57.7% since the end of September (through 12/2) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.