There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other successful funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze MannKind Corporation (NASDAQ:MNKD).
In MannKind Corporation (NASDAQ:MNKD)’s case, it looks like money managers are in an optimistic mood, as the number of funds from our database long the stock inched up by one between July and September. At the end of this article we will also compare MNKD to other stocks including IntelSat SA (NYSE:I), Sigma Designs Inc (NASDAQ:SIGM), and Atlantic Power Corp (NYSE:AT) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Now, let’s go over the latest action regarding MannKind Corporation (NASDAQ:MNKD).
What does the smart money think about MannKind Corporation (NASDAQ:MNKD)?
At Q3’s end, seven funds tracked by Insider Monkey were long this stock, a change of 17% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MNKD over the last five quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Matt Sirovich and Jeremy Mindich’s Scopia Capital has the biggest position in MannKind Corporation (NASDAQ:MNKD), worth close to $3 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Sabby Capital, led by Hal Mintz, holding a $1.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions include D E Shaw, one of the biggest hedge funds in the world, and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As industrywide interest jumped, some big names have jumped into MannKind Corporation (NASDAQ:MNKD) headfirst. Sabby Capital initiated the most valuable position in MannKind Corporation (NASDAQ:MNKD). Citadel Investment Group also initiated a $0.2 million position during the quarter.
Let’s check out hedge fund activity in other stocks similar to MannKind Corporation (NASDAQ:MNKD). These stocks are IntelSat SA (NYSE:I), Sigma Designs Inc (NASDAQ:SIGM), Atlantic Power Corp (NYSE:AT), and Farmers National Banc Corp (NASDAQ:FMNB). This group of stocks’ market valuations match MNKD’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $5 million in MNKD’s case. Sigma Designs Inc (NASDAQ:SIGM) is the most popular stock in this table. On the other hand Farmers National Banc Corp (NASDAQ:FMNB) is the least popular one with only seven bullish hedge fund positions, which is the same number as in MannKind Corporation (NASDAQ:MNKD)’s case. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.