Is Menlo Therapeutics Inc. (NASDAQ:MNLO) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have 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 Menlo Therapeutics Inc. ready to rally soon? Hedge funds are becoming less confident. The number of long hedge fund positions were cut by 1 lately. Our calculations also showed that MNLO isn’t among the 30 most popular stocks among hedge funds.
In today’s marketplace there are tons of metrics stock traders employ to evaluate publicly traded companies. Some of the most innovative metrics are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can beat the market by a superb amount (see the details here).
Our readers will be interested to know that venBio Global Strategic Fund II L.P. was responsible for the last major insider purchase of the company’s common stock, snapping up 265,000 shares at $17.00 in January 2018. The shares are presently trading at $5.45, therefore the shares have not turned a profit as of yet.
Hedge fund activity in Menlo Therapeutics Inc. (NASDAQ:MNLO)
At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards MNLO over the last 13 quarters. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
The largest stake in Menlo Therapeutics Inc. (NASDAQ:MNLO) was held by Great Point Partners, which reported holding $12.8 million worth of stock at the end of September. It was followed by Baker Bros. Advisors with a $6.9 million position. Other investors bullish on the company including OrbiMed Advisors, Rock Springs Capital Management, and DAFNA Capital Management.
Judging by the fact that Menlo Therapeutics Inc. (NASDAQ:MNLO) has witnessed a decline in interest from the smart money, we can see that there exist a select few money managers that slashed their entire stakes in the third quarter. Intriguingly, Joseph Edelman’s Perceptive Advisors cut the biggest stake of all the hedgies tracked by Insider Monkey, totaling close to $10.1 million in stock. Israel Englander’s fund, Millennium Management, also dropped its stock, about $1.7 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 1 fund in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Menlo Therapeutics Inc. (NASDAQ:MNLO). We will take a look at Pyxus International, Inc. (NYSE:PYX), TravelCenters of America LLC (NASDAQ:TA), Apollo Tactical Income Fund Inc. (NYSE:AIF), and Midstates Petroleum Company, Inc. (NYSE:MPO). All of these stocks’ market caps are closest to MZOR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PYX | 4 | 6143 | 4 |
| TA | 11 | 19412 | 2 |
| AIF | 2 | 428 | -1 |
| MPO | 17 | 136251 | 2 |
| Average | 8.5 | 40559 | 1.75 |
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As you can see these stocks had an average of 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $31 million in MNLO’s case. MIDSTATES PETROLEUM COMPANY, INC. (NYSE:MPO) is the most popular stock in this table. On the other hand, Apollo Tactical Income Fund Inc. (NYSE:AIF) is the least popular one with only 2 bullish hedge fund positions. Menlo Therapeutics Inc. (NASDAQ:MNLO) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, MPO might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.