The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small-cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think about small-cap stocks. In this article, we take a closer look at Radius Health Inc (NASDAQ:RDUS) from the perspective of these elite funds.
Radius Health Inc (NASDAQ:RDUS) was in 23 hedge funds’ portfolios at the end of the third quarter of 2015. RDUS has experienced neutral support from the world’s most elite money managers in recent months. There were 23 hedge funds in our database with RDUS positions at the end of the previous quarter.
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At the moment there are plenty of signals market participants employ to assess their stock investments. A couple of the less utilized signals are hedge fund and insider trading interest. Experts at Insider Monkey, a website specializing in hedge funds, have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat their index-focused peers by a superb margin (see the details here).
With all of this in mind, we’re going to go over the new action encompassing Radius Health Inc (NASDAQ:RDUS).
What does the smart money think about Radius Health Inc (NASDAQ:RDUS)?
At Q3’s end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish in this stock, unchanged from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings considerably.
When looking at the hedgies followed by Insider Monkey, Bain Capital’s Brookside Capital had the number one position in Radius Health Inc (NASDAQ:RDUS), worth close to $139.9 million, comprising 4.2% of its total 13F portfolio. The second-most bullish hedge fund manager is Farallon Capital, led by Thomas Steyer, holding a $72.5 million position; the fund has 1% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions consist of Jason Karp’s Tourbillon Capital Partners, Israel Englander’s Millennium Management, and Ken Griffin’s Citadel Investment Group.
Seeing as Radius Health Inc (NASDAQ:RDUS) has experienced bearish sentiment from the smart money, it’s easy to see that there exists a select few money managers who were dropping their entire stakes in the third quarter. Interestingly, Joseph Edelman’s Perceptive Advisors cut the biggest stake of the 700 funds monitored by Insider Monkey, comprising close to $15.9 million in stock. Jim Simons’ fund, Renaissance Technologies, also dumped its stock, about $7.5 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks similar to Radius Health Inc (NASDAQ:RDUS). We will take a look at DCT Industrial Trust Inc. (NYSE:DCT), Ubiquiti Networks Inc (NASDAQ:UBNT), Hill-Rom Holdings, Inc. (NYSE:HRC), and Boardwalk Pipeline Partners, LP (NYSE:BWP). This group of stocks’ market values are closest to RDUS’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
Elite investors are overweight RDUS, owning $563 million worth of its shares, totaling 18.90% of its common stock. While ownership was unchanged during the quarter, smart money did buy more shares, with value of their holdings far surpassing the moderate gains in the stock during Q3. Thus, it appears that smart money is optimistic about Radius Health at the moment. With the returns shown by our studies, everyday investors must always watch hedge fund sentiment, and Radius Health Inc (NASDAQ:RDUS) is an important part of this process.