Before we spend many hours researching a company, we’d like to analyze what hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last 12 months ending in October 30. Sixty three percent of these 30 stocks outperformed the market. Although the elite funds occasionally have their duds, such as Micron and Anadarko Petroleum, which fell 50% and 26%, respectively during the same time period, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Aquinox Pharmaceuticals Inc (NASDAQ:AQXP).
Aquinox Pharmaceuticals Inc (NASDAQ:AQXP) investors should be aware of an increase in activity from the world’s largest hedge funds recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Ares Dynamic Credit Allocation Fund Inc (NYSE:ARDC), McEwen Mining Inc (NYSE:MUX), and United Community Financial Corp (NASDAQ:UCFC) to gather more data points.
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To the average investor, there are a large number of tools that stock market investors put to use to assess stocks. A duo of the less utilized tools are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can outclass their index-focused peers by a healthy margin (see the details here).
Now, let’s take a look at the fresh action regarding Aquinox Pharmaceuticals Inc (NASDAQ:AQXP).
How are hedge funds trading Aquinox Pharmaceuticals Inc (NASDAQ:AQXP)?
At the end of Q3, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 44% from the previous quarter. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Baker Bros. Advisors, managed by Julian Baker and Felix Baker, holds the number one position in Aquinox Pharmaceuticals Inc (NASDAQ:AQXP). Baker Bros. Advisors has a $94.9 million position in the stock, comprising 0.9% of its 13F portfolio. Sitting at the No. 2 spot is Peter Kolchinsky of RA Capital Management, with a $21.6 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Jacob Gottlieb’s Visium Asset Management, Jeremy Green’s Redmile Group, and Bihua Chen’s Cormorant Asset Management.
As aggregate interest increased, key money managers have been driving this bullishness. Redmile Group made a $7.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Jeffrey Jay and David Kroin’s Great Point Partners, Hal Mintz’s Sabby Capital, and Israel Englander’s Millennium Management.
Let’s also examine hedge fund activity in other stocks similar to Aquinox Pharmaceuticals Inc (NASDAQ:AQXP). These stocks are Ares Dynamic Credit Allocation Fund Inc (NYSE:ARDC), McEwen Mining Inc (NYSE:MUX), United Community Financial Corp (NASDAQ:UCFC), and Tuesday Morning Corporation (NASDAQ:TUES). This group of stocks’ market values is similar to Aquinox Pharmaceuticals Inc (NASDAQ:AQXP)’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARDC | 4 | 9686 | 2 |
| MUX | 7 | 7806 | -3 |
| UCFC | 11 | 22815 | 0 |
| TUES | 13 | 42329 | -3 |
As you can see, these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $152 million in Aquinox Pharmaceuticals Inc (NASDAQ:AQXP)’s case. Tuesday Morning Corporation (NASDAQ:TUES) is the most popular stock in this table. On the other hand, Ares Dynamic Credit Allocation Fund Inc (NYSE:ARDC) is the least popular one with only 4 bullish hedge fund positions. Aquinox Pharmaceuticals Inc (NASDAQ:AQXP) 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. In this regard, Tuesday Morning Corporation (NASDAQ:TUES) might be a better candidate to consider a long position.
