Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Were Hedge Funds Right About Supernus Pharmaceuticals Inc (SUPN)?

Hedge funds don’t get the respect they used to get. Nowadays investors prefer passive funds over actively managed funds. One thing they don’t realize is that 100% of the passive funds didn’t see the coronavirus recession coming, but a lot of hedge funds did. Even we published an article near the end of February and predicted a US recession. Think about all the losses you could have avoided if you sold your shares in February and bought them back at the end of March. In this article we will take a look at whether Supernus Pharmaceuticals Inc (NASDAQ:SUPN) is a good investment right now.

Is Supernus Pharmaceuticals Inc (NASDAQ:SUPN) a bargain? Prominent investors are buying. The number of long hedge fund bets moved up by 2 in recent months. Our calculations also showed that SUPN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). SUPN was in 20 hedge funds’ portfolios at the end of December. There were 18 hedge funds in our database with SUPN positions at the end of the previous quarter.

In the 21st century investor’s toolkit there are numerous methods stock traders have at their disposal to value publicly traded companies. A pair of the most innovative methods are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the best money managers can beat the broader indices by a superb margin (see the details here).

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

We leave no stone unturned when looking for the next great investment idea. For example, this investor can predict short term winners following earnings announcements with 77% accuracy, so we check out his stock picks. A former hedge fund manager is pitching the “next Amazon” in this video; again we are listening. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a glance at the fresh hedge fund action surrounding Supernus Pharmaceuticals Inc (NASDAQ:SUPN).

Hedge fund activity in Supernus Pharmaceuticals Inc (NASDAQ:SUPN)

At Q4’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in SUPN a year ago. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Among these funds, Armistice Capital held the most valuable stake in Supernus Pharmaceuticals Inc (NASDAQ:SUPN), which was worth $40.6 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $21.8 million worth of shares. Millennium Management, Winton Capital Management, and Marshall Wace LLP were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Armistice Capital allocated the biggest weight to Supernus Pharmaceuticals Inc (NASDAQ:SUPN), around 2.34% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, setting aside 0.53 percent of its 13F equity portfolio to SUPN.

As aggregate interest increased, some big names were breaking ground themselves. Armistice Capital, managed by Steven Boyd, assembled the biggest position in Supernus Pharmaceuticals Inc (NASDAQ:SUPN). Armistice Capital had $40.6 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $1.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Minhua Zhang’s Weld Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and Peter Muller’s PDT Partners.

Let’s check out hedge fund activity in other stocks similar to Supernus Pharmaceuticals Inc (NASDAQ:SUPN). We will take a look at Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB), ShockWave Medical, Inc. (NASDAQ:SWAV), Hess Midstream Partners LP (NYSE:HESM), and Knoll Inc (NYSE:KNL). This group of stocks’ market valuations resemble SUPN’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
YMAB 12 119532 4
SWAV 15 104145 5
HESM 9 13068 1
KNL 19 63212 4
Average 13.75 74989 3.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $130 million in SUPN’s case. Knoll Inc (NYSE:KNL) is the most popular stock in this table. On the other hand Hess Midstream Partners LP (NYSE:HESM) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Supernus Pharmaceuticals Inc (NASDAQ:SUPN) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.3% in 2020 through May 1st but still managed to beat the market by 12.9 percentage points. Hedge funds were also right about betting on SUPN, though not to the same extent, as the stock returned -2.1% in 2020 (through May 1st) and outperformed the market as well.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.