Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Marinus Pharmaceuticals Inc (NASDAQ:MRNS)? The smart money sentiment can provide an answer to this question.
Marinus Pharmaceuticals Inc (NASDAQ:MRNS) was in 10 hedge funds’ portfolios at the end of March. MRNS investors should be aware of a decrease in enthusiasm from smart money in recent months. There were 12 hedge funds in our database with MRNS holdings at the end of the previous quarter. Our calculations also showed that MRNS isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
William Leland Edwards of Palo Alto Investors
Let’s review the fresh hedge fund action encompassing Marinus Pharmaceuticals Inc (NASDAQ:MRNS).
What have hedge funds been doing with Marinus Pharmaceuticals Inc (NASDAQ:MRNS)?
Heading into the second quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MRNS over the last 15 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Among these funds, Granite Point Capital held the most valuable stake in Marinus Pharmaceuticals Inc (NASDAQ:MRNS), which was worth $12.7 million at the end of the first quarter. On the second spot was 683 Capital Partners which amassed $5.9 million worth of shares. Moreover, Granite Point Capital, Endurant Capital Management, and OrbiMed Advisors were also bullish on Marinus Pharmaceuticals Inc (NASDAQ:MRNS), allocating a large percentage of their portfolios to this stock.
Since Marinus Pharmaceuticals Inc (NASDAQ:MRNS) has experienced declining sentiment from hedge fund managers, we can see that there is a sect of money managers that decided to sell off their full holdings last quarter. At the top of the heap, Christopher James’s Partner Fund Management said goodbye to the largest position of all the hedgies followed by Insider Monkey, totaling close to $1.5 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund cut about $0.9 million worth. These transactions are important to note, as total hedge fund interest dropped by 2 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to Marinus Pharmaceuticals Inc (NASDAQ:MRNS). These stocks are BCB Bancorp, Inc. (NASDAQ:BCBP), Maui Land & Pineapple Company, Inc. (NYSE:MLP), Athersys, Inc. (NASDAQ:ATHX), and Select Bancorp, Inc. (NASDAQ:SLCT). This group of stocks’ market caps are similar to MRNS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BCBP | 2 | 6458 | -2 |
| MLP | 2 | 6544 | 0 |
| ATHX | 6 | 1491 | 1 |
| SLCT | 4 | 5603 | 0 |
| Average | 3.5 | 5024 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.5 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $25 million in MRNS’s case. Athersys, Inc. (NASDAQ:ATHX) is the most popular stock in this table. On the other hand BCB Bancorp, Inc. (NASDAQ:BCBP) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Marinus Pharmaceuticals Inc (NASDAQ:MRNS) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately MRNS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MRNS were disappointed as the stock returned -1.9% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
