Taro Pharmaceutical Industries Ltd. (TARO): Are Hedge Funds Right To Fear This Stock?

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As aggregate interest increased, key hedge funds have been driving this bullishness. Clinton Group created the most valuable position in Taro Pharmaceutical Industries Ltd. (NYSE:TARO). Clinton Group had $6.6 million invested in the company at the end of the quarter. Millennium Management also made a $3.9 million investment in the stock during the quarter. The other funds with brand new TARO positions are Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, Alec Litowitz and Ross Laser’s Magnetar Capital, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s now review hedge fund activity in other stocks similar to Taro Pharmaceutical Industries Ltd. (NYSE:TARO). We will take a look at Lennox International Inc. (NYSE:LII), Reinsurance Group of America Inc (NYSE:RGA), Mercadolibre Inc (NASDAQ:MELI), and Liberty Broadband Corp (NASDAQ:LBRDK). All of these stocks’ market caps are closest to TARO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LII 16 100308 1
RGA 19 286614 2
MELI 29 592569 8
LBRDK 42 3745967 -1

As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $1.18 billion. That figure was $108 million in TARO’s case. Liberty Broadband Corp (NASDAQ:LBRDK) is the most popular stock in this table. On the other hand Lennox International Inc. (NYSE:LII) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Taro Pharmaceutical Industries Ltd. (NYSE:TARO) is even less popular than LII. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None

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