Is COLL A Good Stock To Buy Now?

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. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. What do these smart investors think about Collegium Pharmaceutical Inc (NASDAQ:COLL)?

Is COLL a good stock to buy now? Hedge funds were becoming less confident. The number of long hedge fund positions went down by 3 lately. Collegium Pharmaceutical Inc (NASDAQ:COLL) was in 17 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 21. Our calculations also showed that COLL 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). There were 20 hedge funds in our database with COLL holdings at the end of June.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.

Kris Jenner - Rock Springs Capital

Kris Jenner of Rock Springs Capital Management

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. With all of this in mind let’s take a look at the new hedge fund action encompassing Collegium Pharmaceutical Inc (NASDAQ:COLL).

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

At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the previous quarter. The graph below displays the number of hedge funds with bullish position in COLL over the last 21 quarters. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

More specifically, Perceptive Advisors was the largest shareholder of Collegium Pharmaceutical Inc (NASDAQ:COLL), with a stake worth $42.8 million reported as of the end of September. Trailing Perceptive Advisors was Camber Capital Management, which amassed a stake valued at $41.6 million. Rubric Capital Management, Renaissance Technologies, and Rock Springs Capital Management 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 Rubric Capital Management allocated the biggest weight to Collegium Pharmaceutical Inc (NASDAQ:COLL), around 3.74% of its 13F portfolio. Camber Capital Management is also relatively very bullish on the stock, designating 2.2 percent of its 13F equity portfolio to COLL.

Judging by the fact that Collegium Pharmaceutical Inc (NASDAQ:COLL) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of fund managers that elected to cut their full holdings last quarter. At the top of the heap, George Soros’s Soros Fund Management sold off the biggest position of all the hedgies tracked by Insider Monkey, valued at about $13.5 million in stock. Jerome Pfund and Michael Sjostrom’s fund, Sectoral Asset Management, also said goodbye to its stock, about $11.5 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 3 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Collegium Pharmaceutical Inc (NASDAQ:COLL) but similarly valued. We will take a look at Ranpak Holdings Corp (NYSE:PACK), Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (NYSE:VLRS), Scholastic Corp (NASDAQ:SCHL), GoPro Inc (NASDAQ:GPRO), Enterprise Financial Services Corp (NASDAQ:EFSC), Partner Communications Company Ltd (NASDAQ:PTNR), and ChipMOS Technologies Inc (NASDAQ:IMOS). This group of stocks’ market values match COLL’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PACK 14 317636 0
VLRS 9 75839 0
SCHL 14 40578 1
GPRO 14 292314 4
EFSC 14 26549 0
PTNR 1 10510 0
IMOS 2 32720 0
Average 9.7 113735 0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.7 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $228 million in COLL’s case. Ranpak Holdings Corp (NYSE:PACK) is the most popular stock in this table. On the other hand Partner Communications Company Ltd (NASDAQ:PTNR) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Collegium Pharmaceutical Inc (NASDAQ:COLL) is more popular among hedge funds. Our overall hedge fund sentiment score for COLL is 76.3. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Unfortunately COLL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on COLL were disappointed as the stock returned -10.4% since the end of the third quarter (through 12/14) 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 most of these stocks already outperformed the market in 2020.

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