Is Viropharma Inc (NASDAQ:VPHM) a good investment?
If you were to ask many traders, hedge funds are seen as useless, old investment vehicles of an era lost to time. Although there are over 8,000 hedge funds in operation in present day, Insider Monkey aim at the top tier of this club, around 525 funds. It is widely held that this group controls the majority of the hedge fund industry’s total assets, and by paying attention to their highest quality investments, we’ve formulated a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Just as crucial, positive insider trading activity is a second way to analyze the marketplace. Obviously, there are lots of motivations for an upper level exec to get rid of shares of his or her company, but only one, very clear reason why they would buy. Many empirical studies have demonstrated the impressive potential of this tactic if you understand what to do (learn more here).
Now that that’s out of the way, it’s important to analyze the latest info for Viropharma Inc (NASDAQ:VPHM).
How are hedge funds trading Viropharma Inc (NASDAQ:VPHM)?
At Q2’s end, a total of 22 of the hedge funds we track were long in this stock, a change of 38% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably.
Out of the hedge funds we follow, Julian Baker and Felix Baker’s Baker Bros. Advisors had the most valuable position in Viropharma Inc (NASDAQ:VPHM), worth close to $244.3 million, comprising 4.8% of its total 13F portfolio. The second largest stake is held by Palo Alto Investors, managed by William Leland Edwards, which held a $113.7 million position; the fund has 13.4% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Matt Sirovich and Jeremy Mindich’s Scopia Capital, D. E. Shaw’s D E Shaw and Ken Griffin’s Citadel Investment Group.
As industrywide interest increased, certain bigger names were breaking ground themselves. Baker Bros. Advisors, managed by Julian Baker and Felix Baker, assembled the largest position in Viropharma Inc (NASDAQ:VPHM). Baker Bros. Advisors had 244.3 million invested in the company at the end of the quarter. William Leland Edwards’s Palo Alto Investors also initiated a $113.7 million position during the quarter. The other funds with new positions in the stock are Matt Sirovich and Jeremy Mindich’s Scopia Capital, D. E. Shaw’s D E Shaw, and Ken Griffin’s Citadel Investment Group.
How are insiders trading Viropharma Inc (NASDAQ:VPHM)?
Bullish insider trading is best served when the primary stock in question has seen transactions within the past six months. Over the last six-month time period, Viropharma Inc (NASDAQ:VPHM) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll go over the relationship between both of these indicators in other stocks similar to Viropharma Inc (NASDAQ:VPHM). These stocks are ImmunoGen, Inc. (NASDAQ:IMGN), Questcor Pharmaceuticals Inc (NASDAQ:QCOR), Synageva BioPharma Corp (NASDAQ:GEVA), Arena Pharmaceuticals, Inc. (NASDAQ:ARNA), and Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY). All of these stocks are in the biotechnology industry and their market caps resemble VPHM’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| ImmunoGen, Inc. (NASDAQ:IMGN) | 4 | 0 | 0 |
| Questcor Pharmaceuticals Inc (NASDAQ:QCOR) | 27 | 0 | 0 |
| Synageva BioPharma Corp (NASDAQ:GEVA) | 8 | 0 | 0 |
| Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) | 11 | 0 | 0 |
| Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) | 19 | 0 | 0 |
Using the results shown by our analyses, regular investors must always keep one eye on hedge fund and insider trading activity, and Viropharma Inc (NASDAQ:VPHM) shareholders fit into this picture quite nicely.
