Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying for a while now that the current market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the fourth quarter, many investors lost money due to unpredictable events such as the sudden increase in long-term interest rates and unintended consequences of the trade war with China. Nevertheless, many of the stocks that tanked in the third quarter still sport strong fundamentals and their decline was more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Intra-Cellular Therapies Inc (NASDAQ:ITCI) changed recently.
Intra-Cellular Therapies Inc (NASDAQ:ITCI) was in 16 hedge funds’ portfolios at the end of the third quarter of 2018. ITCI investors should pay attention to a decrease in enthusiasm from smart money lately. There were 18 hedge funds in our database with ITCI holdings at the end of the previous quarter. Our calculations also showed that ITCI isn’t among the 30 most popular stocks among hedge funds.
To the average investor there are tons of indicators shareholders employ to size up stocks. A couple of the most innovative indicators are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the top investment managers can trounce the market by a solid margin (see the details here).
We’re going to take a gander at the fresh hedge fund action regarding Intra-Cellular Therapies Inc (NASDAQ:ITCI).
What have hedge funds been doing with Intra-Cellular Therapies Inc (NASDAQ:ITCI)?
Heading into the fourth quarter of 2018, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from one quarter earlier. On the other hand, there were a total of 18 hedge funds with a bullish position in ITCI at the beginning of this year. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, Citadel Investment Group was the largest shareholder of Intra-Cellular Therapies Inc (NASDAQ:ITCI), with a stake worth $16.9 million reported as of the end of September. Trailing Citadel Investment Group was Samlyn Capital, which amassed a stake valued at $16.7 million. Point72 Asset Management, Millennium Management, and Balyasny Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
Since Intra-Cellular Therapies Inc (NASDAQ:ITCI) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there is a sect of funds who were dropping their positions entirely by the end of the third quarter. Interestingly, Zach Schreiber’s Point State Capital cut the biggest stake of all the hedgies monitored by Insider Monkey, worth about $8.4 million in stock, and Efrem Kamen’s Pura Vida Investments was right behind this move, as the fund dumped about $0.4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 2 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Intra-Cellular Therapies Inc (NASDAQ:ITCI) but similarly valued. We will take a look at K2M Group Holdings Inc (NASDAQ:KTWO), Natus Medical Inc (NASDAQ:BABY), Osisko Gold Royalties Ltd (NYSE:OR), and SecureWorks Corp. (NASDAQ:SCWX). This group of stocks’ market caps are closest to ITCI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KTWO | 24 | 210140 | 10 |
| BABY | 19 | 113281 | 4 |
| OR | 10 | 18157 | 4 |
| SCWX | 8 | 32331 | 2 |
| Average | 15.25 | 93477 | 5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $93 million. That figure was $121 million in ITCI’s case. K2M Group Holdings Inc (NASDAQ:KTWO) is the most popular stock in this table. On the other hand SecureWorks Corp. (NASDAQ:SCWX) is the least popular one with only 8 bullish hedge fund positions. Intra-Cellular Therapies Inc (NASDAQ:ITCI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard KTWO might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
