Were Hedge Funds Right About Vanda Pharmaceuticals Inc. (VNDA)?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) based on those filings.

Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) has experienced a decrease in hedge fund interest in recent months. Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) was in 18 hedge funds’ portfolios at the end of March. The all time high for this statistic is 25. There were 20 hedge funds in our database with VNDA holdings at the end of December. Our calculations also showed that VNDA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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Roger Ibbotson of Zebra Capital Management

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Do Hedge Funds Think VNDA Is A Good Stock To Buy Now?

At the end of March, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from one quarter earlier. On the other hand, there were a total of 20 hedge funds with a bullish position in VNDA a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is VNDA A Good Stock To Buy?

According to Insider Monkey’s hedge fund database, Armistice Capital, managed by Steven Boyd, holds the largest position in Vanda Pharmaceuticals Inc. (NASDAQ:VNDA). Armistice Capital has a $57 million position in the stock, comprising 1.3% of its 13F portfolio. Coming in second is Palo Alto Investors, with a $57 million position; the fund has 3.2% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish encompass Renaissance Technologies, D. E. Shaw’s D E Shaw and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Palo Alto Investors allocated the biggest weight to Vanda Pharmaceuticals Inc. (NASDAQ:VNDA), around 3.25% of its 13F portfolio. Armistice Capital is also relatively very bullish on the stock, setting aside 1.31 percent of its 13F equity portfolio to VNDA.

Seeing as Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) has faced declining sentiment from the smart money, it’s easy to see that there is a sect of hedgies that slashed their full holdings by the end of the first quarter. At the top of the heap, Orin Hirschman’s AIGH Investment Partners dumped the biggest stake of all the hedgies watched by Insider Monkey, totaling about $4.6 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund sold off about $2.2 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 2 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks similar to Vanda Pharmaceuticals Inc. (NASDAQ:VNDA). These stocks are Adaptimmune Therapeutics plc (NASDAQ:ADAP), Tucows Inc. (NYSE:TCX), Byline Bancorp, Inc. (NYSE:BY), Avidity Biosciences, Inc. (NASDAQ:RNA), OptimizeRx Corporation (NASDAQ:OPRX), Allegiance Bancshares, Inc. (NASDAQ:ABTX), and Vasta Platform Limited (NASDAQ:VSTA). This group of stocks’ market values match VNDA’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ADAP 15 343461 -2
TCX 7 84763 0
BY 8 28220 1
RNA 15 219671 -2
OPRX 11 48205 3
ABTX 5 10063 0
VSTA 4 14845 -4
Average 9.3 107033 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.3 hedge funds with bullish positions and the average amount invested in these stocks was $107 million. That figure was $207 million in VNDA’s case. Adaptimmune Therapeutics plc (NASDAQ:ADAP) is the most popular stock in this table. On the other hand Vasta Platform Limited (NASDAQ:VSTA) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) is more popular among hedge funds. Our overall hedge fund sentiment score for VNDA is 74.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 28.5% in 2021 through July 23rd but still managed to beat the market by 10.1 percentage points. Hedge funds were also right about betting on VNDA as the stock returned 30.8% since the end of March (through 7/23) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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