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Were Hedge Funds Right About Dumping Aptinyx Inc. (APTX) ?

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of Aptinyx Inc. (NASDAQ:APTX) based on that data.

Aptinyx Inc. (NASDAQ:APTX) was in 9 hedge funds’ portfolios at the end of the fourth quarter of 2018. APTX shareholders have witnessed a decrease in activity from the world’s largest hedge funds recently. There were 12 hedge funds in our database with APTX holdings at the end of the previous quarter. Our calculations also showed that APTX isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Phill Gross, Adage Capital Management

Let’s review the recent hedge fund action regarding Aptinyx Inc. (NASDAQ:APTX).

Hedge fund activity in Aptinyx Inc. (NASDAQ:APTX)

Heading into the first quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards APTX over the last 14 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

APTX_may2019

The largest stake in Aptinyx Inc. (NASDAQ:APTX) was held by Frazier Healthcare Partners, which reported holding $52.8 million worth of stock at the end of December. It was followed by Partner Fund Management with a $30.6 million position. Other investors bullish on the company included Farallon Capital, Point72 Asset Management, and Adage Capital Management.

Since Aptinyx Inc. (NASDAQ:APTX) has faced a decline in interest from the aggregate hedge fund industry, logic holds that there is a sect of hedge funds that slashed their positions entirely last quarter. Intriguingly, Benjamin A. Smith’s Laurion Capital Management dropped the biggest position of all the hedgies monitored by Insider Monkey, valued at about $2.6 million in stock. Hal Mintz’s fund, Sabby Capital, also cut its stock, about $1.2 million worth. These moves are important to note, as aggregate hedge fund interest fell by 3 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Aptinyx Inc. (NASDAQ:APTX) but similarly valued. These stocks are Global Partners LP (NYSE:GLP), India Fund, Inc. (The) (NYSE:IFN), Ballard Power Systems Inc. (NASDAQ:BLDP), and Mercantil Bank Holding Corporation (NASDAQ:AMTB). All of these stocks’ market caps resemble APTX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GLP 4 1482 2
IFN 2 1265 1
BLDP 2 174 -1
AMTB 3 6356 3
Average 2.75 2319 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.75 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $117 million in APTX’s case. Global Partners LP (NYSE:GLP) is the most popular stock in this table. On the other hand India Fund, Inc. (The) (NYSE:IFN) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Aptinyx Inc. (NASDAQ:APTX) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately APTX wasn’t nearly as popular as these 15 stock and hedge funds that were betting on APTX were disappointed as the stock returned -77.9% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

Disclosure: None. This article was originally published at Insider Monkey.

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