With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Amneal Pharmaceuticals, Inc. (NYSE:AMRX).
Is AMRX a good stock to buy now? Hedge fund interest in Amneal Pharmaceuticals, Inc. (NYSE:AMRX) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that AMRX 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). At the end of this article we will also compare AMRX to other stocks including Loop Industries, Inc. (NASDAQ:LOOP), Agilysys, Inc. (NASDAQ:AGYS), and Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most market participants, hedge funds are perceived as worthless, outdated investment tools of yesteryear. While there are over 8000 funds in operation at the moment, We hone in on the moguls of this club, approximately 850 funds. These hedge fund managers preside over the majority of the hedge fund industry’s total capital, and by keeping an eye on their finest stock picks, Insider Monkey has determined numerous investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. Keeping this in mind we’re going to analyze the recent hedge fund action encompassing Amneal Pharmaceuticals, Inc. (NYSE:AMRX).
Do Hedge Funds Think AMRX Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2020. On the other hand, there were a total of 10 hedge funds with a bullish position in AMRX a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Amneal Pharmaceuticals, Inc. (NYSE:AMRX) was held by Eversept Partners, which reported holding $10.3 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $5.1 million position. Other investors bullish on the company included Prosight Capital, Springbok Capital, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Eversept Partners allocated the biggest weight to Amneal Pharmaceuticals, Inc. (NYSE:AMRX), around 2.32% of its 13F portfolio. Prosight Capital is also relatively very bullish on the stock, earmarking 0.95 percent of its 13F equity portfolio to AMRX.
Because Amneal Pharmaceuticals, Inc. (NYSE:AMRX) has experienced a decline in interest from the smart money, we can see that there was a specific group of fund managers that elected to cut their positions entirely last quarter. Intriguingly, Krishen Sud’s Sivik Global Healthcare dropped the largest investment of the 750 funds watched by Insider Monkey, valued at close to $2.9 million in stock, and Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management was right behind this move, as the fund dropped about $0.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks similar to Amneal Pharmaceuticals, Inc. (NYSE:AMRX). These stocks are Loop Industries, Inc. (NASDAQ:LOOP), Agilysys, Inc. (NASDAQ:AGYS), Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX), Nicolet Bankshares Inc. (NASDAQ:NCBS), Athira Pharma, Inc. (NASDAQ:ATHA), RPC, Inc. (NYSE:RES), and Kraton Corporation (NYSE:KRA). All of these stocks’ market caps are closest to AMRX’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 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $20 million in AMRX’s case. Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX) is the most popular stock in this table. On the other hand Nicolet Bankshares Inc. (NASDAQ:NCBS) is the least popular one with only 1 bullish hedge fund positions. Amneal Pharmaceuticals, Inc. (NYSE:AMRX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AMRX is 51.2. 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 gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on AMRX as the stock returned 12.1% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.