The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 28. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Retrophin Inc (NASDAQ:RTRX).
Is Retrophin Inc (NASDAQ:RTRX) a safe investment today? The best stock pickers are selling. The number of bullish hedge fund positions were trimmed by 4 in recent months. Our calculations also showed that RTRX isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to 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 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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s check out the fresh hedge fund action surrounding Retrophin Inc (NASDAQ:RTRX).
How have hedgies been trading Retrophin Inc (NASDAQ:RTRX)?
At Q2’s end, a total of 19 of the hedge 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 RTRX over the last 16 quarters. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Scopia Capital held the most valuable stake in Retrophin Inc (NASDAQ:RTRX), which was worth $78 million at the end of the second quarter. On the second spot was Consonance Capital Management which amassed $76.6 million worth of shares. Moreover, Perceptive Advisors, Broadfin Capital, and Great Point Partners were also bullish on Retrophin Inc (NASDAQ:RTRX), allocating a large percentage of their portfolios to this stock.
Since Retrophin Inc (NASDAQ:RTRX) has experienced declining sentiment from the smart money, it’s safe to say that there was a specific group of money managers who sold off their full holdings heading into Q3. It’s worth mentioning that Ken Greenberg and David Kim’s Ghost Tree Capital said goodbye to the largest investment of the “upper crust” of funds watched by Insider Monkey, worth close to $11.3 million in stock. Howard Marks’s fund, Oaktree Capital Management, also dropped its stock, about $8.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 4 funds heading into Q3.
Let’s also examine hedge fund activity in other stocks similar to Retrophin Inc (NASDAQ:RTRX). These stocks are Homology Medicines, Inc. (NASDAQ:FIXX), ScanSource, Inc. (NASDAQ:SCSC), GoPro Inc (NASDAQ:GPRO), and Vericel Corp (NASDAQ:VCEL). All of these stocks’ market caps are similar to RTRX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FIXX | 18 | 184706 | 11 |
| SCSC | 8 | 51782 | -2 |
| GPRO | 19 | 190326 | -4 |
| VCEL | 17 | 176656 | -8 |
| Average | 15.5 | 150868 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $151 million. That figure was $352 million in RTRX’s case. GoPro Inc (NASDAQ:GPRO) is the most popular stock in this table. On the other hand ScanSource, Inc. (NASDAQ:SCSC) is the least popular one with only 8 bullish hedge fund positions. Retrophin Inc (NASDAQ:RTRX) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately RTRX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on RTRX were disappointed as the stock returned -42.3% during the third quarter 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
