Is Salix Pharmaceuticals, Ltd. (SLXP) Going to Burn These Hedge Funds?

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Is Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) worth your attention right now? The best stock pickers are becoming less hopeful. The number of long hedge fund bets went down by 7 in recent months.

If you’d ask most market participants, hedge funds are assumed to be underperforming, old investment tools of the past. While there are greater than 8000 funds with their doors open at the moment, we at Insider Monkey hone in on the leaders of this group, close to 450 funds. It is widely believed that this group has its hands on the majority of all hedge funds’ total asset base, and by tracking their best equity investments, we have figured out a number of investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP)Equally as beneficial, positive insider trading activity is a second way to parse down the stock market universe. There are plenty of reasons for an upper level exec to get rid of shares of his or her company, but just one, very clear reason why they would initiate a purchase. Various academic studies have demonstrated the market-beating potential of this tactic if investors understand what to do (learn more here).

With all of this in mind, we’re going to take a gander at the latest action regarding Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP).

Hedge fund activity in Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP)

At the end of the first quarter, a total of 17 of the hedge funds we track held long positions in this stock, a change of -29% from the first quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes significantly.

Of the funds we track, Steven Cohen’s SAC Capital Advisors had the most valuable position in Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP), worth close to $40.6 million, accounting for 0.2% of its total 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which held a $27.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Israel Englander’s Millennium Management, Sanford J. Colen’s Apex Capital and Samuel Isaly’s OrbiMed Advisors.

Seeing as Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) has witnessed a declination in interest from the entirety of the hedge funds we track, we can see that there were a few fund managers who sold off their full holdings heading into Q2. It’s worth mentioning that Rob Citrone’s Discovery Capital Management dumped the largest stake of the 450+ funds we track, valued at an estimated $88.6 million in stock., and Glenn Russell Dubin of Highbridge Capital Management was right behind this move, as the fund sold off about $6 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 7 funds heading into Q2.

Insider trading activity in Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP)

Bullish insider trading is at its handiest when the company in focus has experienced transactions within the past six months. Over the last 180-day time frame, Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) has seen zero unique insiders purchasing, and 8 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP). These stocks are Ligand Pharmaceuticals Inc. (NASDAQ:LGND), Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA), Actavis Inc (NYSE:ACT), Mylan Inc. (NASDAQ:MYL), and Akorn, Inc. (NASDAQ:AKRX). This group of stocks are in the drugs – generic industry and their market caps match SLXP’s market cap.

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