Is TBPH A Good Stock To Buy According To Hedge Funds?

In this article we will check out the progression of hedge fund sentiment towards Theravance Biopharma Inc (NASDAQ:TBPH) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is TBPH a good stock to buy now? Theravance Biopharma Inc (NASDAQ:TBPH) was in 17 hedge funds’ portfolios at the end of September. The all time high for this statistic is 18. TBPH shareholders have witnessed a decrease in hedge fund interest recently. There were 18 hedge funds in our database with TBPH holdings at the end of June. Our calculations also showed that TBPH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Samuel Isaly, Founder of OrbiMed Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s take a look at the recent hedge fund action surrounding Theravance Biopharma Inc (NASDAQ:TBPH).

Do Hedge Funds Think TBPH Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TBPH over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Theravance Biopharma Inc (NASDAQ:TBPH) was held by Baupost Group, which reported holding $129.1 million worth of stock at the end of September. It was followed by OrbiMed Advisors with a $92 million position. Other investors bullish on the company included Chescapmanager LLC, Rock Springs Capital Management, and Adage Capital Management. In terms of the portfolio weights assigned to each position Chescapmanager LLC allocated the biggest weight to Theravance Biopharma Inc (NASDAQ:TBPH), around 2.77% of its 13F portfolio. Baupost Group is also relatively very bullish on the stock, setting aside 1.4 percent of its 13F equity portfolio to TBPH.

Due to the fact that Theravance Biopharma Inc (NASDAQ:TBPH) has faced declining sentiment from the smart money, it’s easy to see that there is a sect of funds who sold off their positions entirely last quarter. Interestingly, Greg Eisner’s Engineers Gate Manager sold off the largest stake of the 750 funds watched by Insider Monkey, valued at an estimated $1.5 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund said goodbye to about $0.3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 1 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Theravance Biopharma Inc (NASDAQ:TBPH) but similarly valued. These stocks are Accel Entertainment, Inc. (NYSE:ACEL), Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC), SecureWorks Corp. (NASDAQ:SCWX), Hope Bancorp, Inc. (NASDAQ:HOPE), The E.W. Scripps Company (NASDAQ:SSP), Heska Corp (NASDAQ:HSKA), and e.l.f. Beauty, Inc. (NYSE:ELF). This group of stocks’ market caps are closest to TBPH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ACEL 19 180025 3
TRHC 9 10137 1
SCWX 12 13864 -1
HOPE 17 53210 -2
SSP 14 97977 0
HSKA 15 155088 1
ELF 24 230236 2
Average 15.7 105791 0.6

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View table here if you experience formatting issues.

As you can see these stocks had an average of 15.7 hedge funds with bullish positions and the average amount invested in these stocks was $106 million. That figure was $292 million in TBPH’s case. e.l.f. Beauty, Inc. (NYSE:ELF) is the most popular stock in this table. On the other hand Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC) is the least popular one with only 9 bullish hedge fund positions. Theravance Biopharma Inc (NASDAQ:TBPH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TBPH is 59. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on TBPH as the stock returned 28.8% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.