Were Hedge Funds Right About Warming Up To Akebia Therapeutics Inc (AKBA)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Akebia Therapeutics Inc (NASDAQ:AKBA) based on that data and determine whether they were really smart about the stock.

Akebia Therapeutics Inc (NASDAQ:AKBA) has experienced an increase in hedge fund interest in recent months. Our calculations also showed that AKBA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most investors, hedge funds are perceived as underperforming, old financial tools of the past. While there are more than 8000 funds with their doors open today, We choose to focus on the bigwigs of this club, around 850 funds. These hedge fund managers have their hands on most of all hedge funds’ total asset base, and by paying attention to their top equity investments, Insider Monkey has determined several investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

David Abrams

David Abrams of Abrams Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now let’s go over the latest hedge fund action surrounding Akebia Therapeutics Inc (NASDAQ:AKBA).

What does smart money think about Akebia Therapeutics Inc (NASDAQ:AKBA)?

At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AKBA over the last 18 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.

Among these funds, Baupost Group held the most valuable stake in Akebia Therapeutics Inc (NASDAQ:AKBA), which was worth $132.9 million at the end of the third quarter. On the second spot was Consonance Capital Management which amassed $54 million worth of shares. Nantahala Capital Management, Abrams Capital Management, and Point72 Asset Management 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 Consonance Capital Management allocated the biggest weight to Akebia Therapeutics Inc (NASDAQ:AKBA), around 4.02% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, setting aside 2.7 percent of its 13F equity portfolio to AKBA.

As one would reasonably expect, key hedge funds were leading the bulls’ herd. Consonance Capital Management, managed by Mitchell Blutt, created the biggest position in Akebia Therapeutics Inc (NASDAQ:AKBA). Consonance Capital Management had $54 million invested in the company at the end of the quarter. Farallon Capital also made a $9.5 million investment in the stock during the quarter. The other funds with brand new AKBA positions are Bhagwan Jay Rao’s Integral Health Asset Management, David M. Knott’s Dorset Management, and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Akebia Therapeutics Inc (NASDAQ:AKBA) but similarly valued. These stocks are JELD-WEN Holding, Inc. (NYSE:JELD), Methode Electronics Inc. (NYSE:MEI), Meritor Inc (NYSE:MTOR), and CSW Industrials, Inc. (NASDAQ:CSWI). This group of stocks’ market caps are closest to AKBA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
JELD 20 144013 -9
MEI 13 71718 -1
MTOR 17 166288 -12
CSWI 16 32007 0
Average 16.5 103507 -5.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $104 million. That figure was $341 million in AKBA’s case. JELD-WEN Holding, Inc. (NYSE:JELD) is the most popular stock in this table. On the other hand Methode Electronics Inc. (NYSE:MEI) is the least popular one with only 13 bullish hedge fund positions. Akebia Therapeutics Inc (NASDAQ:AKBA) is not the most popular stock in this group but hedge fund interest is still above average. 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 18.6% in 2020 through July 27th but still beat the market by 17.1 percentage points. Hedge funds were also right about betting on AKBA as the stock returned 60% since Q1 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Follow Akebia Therapeutics Inc. (NASDAQ:AKBA)

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