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Is DURECT Corporation (NASDAQ:DRRX) A Good Stock To Buy?

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in the third quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about DURECT Corporation (NASDAQ:DRRX) in this article.

DURECT Corporation (NASDAQ:DRRX) has seen an increase in hedge fund sentiment lately. At the end of this article we will also compare DRRX to other stocks, including Bluerock Residential Growth REIT Inc (NYSEMKT:BRG), Flexsteel Industries, Inc. (NASDAQ:FLXS), and Tokai Pharmaceuticals Inc (NASDAQ:TKAI) to get a better sense of its popularity.

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According to most investors, hedge funds are perceived as unimportant, old financial tools of years past. While there are greater than 8000 funds trading at the moment, We look at the crème de la crème of this club, approximately 700 funds. Most estimates calculate that this group of people manage the lion’s share of the smart money’s total asset base, and by keeping track of their best equity investments, Insider Monkey has found several investment strategies that have historically outstripped the market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per year for a decade in their back tests.

With all of this in mind, let’s take a look at the recent action encompassing DURECT Corporation (NASDAQ:DRRX).

Hedge fund activity in DURECT Corporation (NASDAQ:DRRX)

Heading into Q4, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Camber Capital Management, managed by Stephen DuBois, holds the biggest position in DURECT Corporation (NASDAQ:DRRX). Camber Capital Management has an $11.7 million position in the stock, comprising 1% of its 13F portfolio. Sitting at the No. 2 spot is 683 Capital Partners, managed by Ari Zweiman, which holds an $8 million position; 1.2% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions include Jeremy Green’s Redmile Group, Israel Englander’s Millennium Management and Cliff Asness’ AQR Capital Management.