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.

What Do Hedge Funds Have To Say About These 3 Purchases?

Most hedge funds and other money managers tracked by Insider Monkey have not submitted their 13F filings for the September quarter just yet. These public filings will surely disclose attractive and attention-grabbing stock picks, but it might take a few more days until market participants will get the chance to take a look at them (the deadline is November 15 for the current filing period). In the meantime, several hedge funds have been revealing 13G, 13D, and Form 4 filings regarding some of their positions, which usually disclose up-to-date insights about their major stances on different companies. So let’s proceed with a discussion on three such moves made by elite hedge funds tracked by our team.

Kevin Kotler

We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about six basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated 10 percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks beat the market by 53 percentage points (102% return vs. S&P 500’s 48.7% gain) over the last 37 months (see the details here).

In a Schedule 13G filing with the U.S. Securities and Exchange Commission, Kevin Kotler’s Broadfin Capital disclosed owning 1.81 million shares of Aratana Therapeutics Inc. (NASDAQ:PETX), which represent 5.17% of the company’s outstanding common stock. This denotes a lift of exactly 678,000 shares from Broadfin’s position disclosed through its 13F filing for the second quarter. The shares of the pet therapeutics company plummeted in September, after it disclosed disappointing clinical trial results. Specifically, Aratana Therapeutics Inc. (NASDAQ:PETX)’s management acknowledged that two of its product candidates will not reach the desired and previously-anticipated lymphoma market opportunity for canines. Partially due to that, the stock is down by 55% year-to-date.

Kevin Kotler
Kevin Kotler
Broadfin Capital

The hedge fund sentiment towards the company did not change significantly during the second quarter, as the number of hedge funds invested in the stock increased to 13 from 12 quarter-over-quarter. These top money managers stockpiled approximately 15% of the company’s shares on June 30. At the same time, the value of their stakes in Aratana increased to $78.34 million from $52.78 million during the three-month period. Healthcare-focused Sio Capital, led by Michael Castor held a 404,738-share stake in Aratana Therapeutics Inc. (NASDAQ:PETX) at the end of the June quarter (read more details).

Follow Aratana Therapeutics Inc. (NASDAQ:PETX)
Trade (NASDAQ:PETX) Now!

Let’s move on to the next page of the article, where we disclose the moves made by Carlson Capital and JANA Partners.

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.