Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) investors should pay attention to a decrease in enthusiasm from smart money recently.
In the 21st century investor’s toolkit, there are a multitude of indicators investors can use to monitor their holdings. Two of the most useful are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top investment managers can outclass the broader indices by a healthy margin (see just how much).
Equally as beneficial, optimistic insider trading sentiment is a second way to break down the investments you’re interested in. Just as you’d expect, there are a variety of incentives for an executive to drop shares of his or her company, but only one, very obvious reason why they would behave bullishly. Various academic studies have demonstrated the impressive potential of this method if shareholders understand what to do (learn more here).
With these “truths” under our belt, it’s important to take a peek at the recent action regarding Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD).
How have hedgies been trading Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD)?
Heading into 2013, a total of 11 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their holdings meaningfully.
When looking at the hedgies we track, Sectoral Asset Management, managed by Jerome Pfund and Michael Sjostrom, holds the biggest position in Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD). Sectoral Asset Management has a $32 million position in the stock, comprising 1.1% of its 13F portfolio. Coming in second is Maverick Capital, managed by Lee Ainslie, which held a $23 million position; 0% of its 13F portfolio is allocated to the stock. Some other hedgies that are bullish include Roberto Mignone’s Bridger Management, D. E. Shaw’s D E Shaw and Israel Englander’s Millennium Management.
Judging by the fact that Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) has witnessed falling interest from hedge fund managers, logic holds that there lies a certain “tier” of fund managers who sold off their positions entirely heading into 2013. Interestingly, Wayne Holman’s Ridgeback Capital Management sold off the biggest stake of the 450+ funds we track, worth an estimated $27 million in stock., and Joseph Edelman of Perceptive Advisors was right behind this move, as the fund sold off about $1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider trading activity in Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD)
Insider buying is at its handiest when the company in focus has seen transactions within the past 180 days. Over the last six-month time period, Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD). These stocks are PerkinElmer, Inc. (NYSE:PKI), WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX), PAREXEL International Corporation (NASDAQ:PRXL), Alere Inc (NYSE:ALR), and ICON plc – Ordinary Shares (NASDAQ:ICLR). This group of stocks are in the medical laboratories & research industry and their market caps are similar to IRWD’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|PerkinElmer, Inc. (NYSE:PKI)||27||0||5|
|WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX)||12||0||0|
|PAREXEL International Corporation (NASDAQ:PRXL)||19||0||12|
|Alere Inc (NYSE:ALR)||24||0||3|
|ICON plc – Ordinary Shares (NASDAQ:ICLR)||16||0||0|
With the returns exhibited by the aforementioned tactics, retail investors should always keep an eye on hedge fund and insider trading sentiment, and Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) is no exception.