Tesla Motors Inc (TSLA), Netflix, ACADIA Pharmaceuticals: This Hedge Fund Manager’s Top Stock Picks for 2017

Mott Capital Management is a long-only fund managed by Michael Kramer. The fund usually invests in stocks with a horizon of 3-5 years and seeks to provide returns over a long run through concentration and selection of a few strong performers in a given sector. In the first 11 months of 2016, Mott Capital lost 3.79%, underperforming the S&P 500, which advanced by 9.79%. Aside from managing the fund, Kramer is also a premium author on Seeking Alpha and a a regular contributor to Investopedia. Recently, Kramer has started a video segment titled “Reading the Market” in collaboration with Jane King of LilaMax Media.

In the latest video segment, which we will provide at the end of this article, Kramer set some of his expectations for the next year. He considers that next year is going to be strong for the markets, especially if investors’ expectations regarding the fiscal policy are going to materialized. In addition, Kramer provided three of his top stock picks for 2017: Tesla Motors Inc (NASDAQ:TSLA), Netflix, Inc. (NASDAQ:NFLX), and ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD). The investor anticipates that next year will be crucial for each of these companies and will be marked by catalysts that should provide strong returns for their shareholders.

Let’s take a closer look at the reasoning behind Kramer’s picks and see if the general smart money crowd shares his opinion, using data we compiled from the latest 13F filings of some 750 investors that we track at Insider Monkey.

Tesla Motors Inc (NASDAQ:TSLA), one of the top 10 luxury car brands in the World, has lost over 13% so far this year, but Kramer believes that next year the company will be in the spotlight in connection with the release of its Model 3 vehicle in the second half of the year. The manager of Mott Capital, who is owns Tesla on behalf of his investors, considers that 2017 is going to be a “make-or-break year” for the EV manufacturer. Since there has been a lot of chatter about Tesla’s latest vehicle that is expected to start a new chapter for the company, Kramer said that he won’t be concerned if the company won’t beat the delivery estimates by a couple of units, but will rather focus on the growth in the number of vehicles. In a comment e-mailed to us, Kramer mentioned that Tesla Motors Inc (NASDAQ:TSLA)’s previous two vehicles, Model S and Model X helped it to build a brand and now with the help of its Gigafactory, the company has to start to deliver on its promises. Having said that, the appreciation of Tesla’s stock can be offset by any news regarding delays in the production of the Model 3. Overall, among smart money investors we track, Tesla Motors Inc (NASDAQ:TSLA) is not particularly popular with 34 funds holding shares as of the end of September.

Kramer also expects Netflix, Inc. (NASDAQ:NFLX) to register growth next year, due to the company continuing to build its international footprint. With the company launching in the majority of countries earlier this year, in 2017 Netflix should further expand its international subscriber numbers, which amounted to 36.8 million at the end of September, up by 95% on the year. Moreover, Kramer pointed out the recent deal between Netflix and Comcast, under the terms of which Netflix, Inc. (NASDAQ:NFLX)’s content became available on Comcast’s set-top box, which provides more access to customers. The company may also enter into similar deals with other cable providers, which can be another catalyst for its stock in 2017. At the end of the third quarter, 55 funds in our database amassed around 9.50% of Netflix, Inc. (NASDAQ:NFLX)’s outstanding stock.

Finally, ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is one of Kramer’s “carry-over” stocks from the last year. The investor pointed out that the company had some positive developments last year, such as the approval of Nuplazid (pimavanserin) for Parkinson’s Disease Psychosis by the FDA, the subsequent strong sales registered by the drug. However, the company’s stock didn’t manage to take off due to issues registered across the entire biotech sector and investors’ disappointment in the company. In his comments sent to us, Kramer considers that Nuplazid sales should continue growing in 2017 and the company is likely to file for the drug’s approval in Europe as well. ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD)  has recently announced that it will launch new trials for pimavanserin involving Alzheimer’s agitation, adjunctive treatment for  schizophrenia and other therapies. It’s worth mentioning that Acadia’s stock is trading higher today on the back of the company announcing that a Phase 2 exploratory clinical trial of pimavanserin for the treatment of Alzheimer’s disease psychosis met its primary endpoint and showed a statistically significant reduction in psychosis compared to placebo. During the third quarter, the number of funds tracked by us long ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) jumped by three to 28 funds that held roughly 26.80% of the company’s stock at the end of September.

You can watch the video here:

Disclosure: none