Where Do Hedge Funds Stand On Amphastar Pharmaceuticals Inc (AMPH)?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) changed recently.

Is Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) going to take off soon? Investors who are in the know were turning less bullish. The number of long hedge fund positions went down by 1 recently. Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) was in 8 hedge funds’ portfolios at the end of September. The all time high for this statistics is 12. Our calculations also showed that AMPH isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 stock holders, hedge funds are perceived as worthless, old investment vehicles of the past. While there are greater than 8000 funds with their doors open today, We hone in on the elite of this club, around 850 funds. Most estimates calculate that this group of people handle the majority of the hedge fund industry’s total asset base, and by following their first-class equity investments, Insider Monkey has discovered many investment strategies that have historically outstripped Mr. Market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

David Harding

David Harding of Winton Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. You can subscribe to our free daily newsletter on our website. With all of this in mind let’s go over the latest hedge fund action surrounding Amphastar Pharmaceuticals Inc (NASDAQ:AMPH).

What does smart money think about Amphastar Pharmaceuticals Inc (NASDAQ:AMPH)?

At the end of September, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in AMPH over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Renaissance Technologies held the most valuable stake in Amphastar Pharmaceuticals Inc (NASDAQ:AMPH), which was worth $7.1 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $2.9 million worth of shares. Millennium Management, Winton Capital Management, and Citadel Investment Group 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 Winton Capital Management allocated the biggest weight to Amphastar Pharmaceuticals Inc (NASDAQ:AMPH), around 0.06% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, dishing out 0.03 percent of its 13F equity portfolio to AMPH.

Seeing as Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) has experienced declining sentiment from the smart money, it’s easy to see that there lies a certain “tier” of hedge funds who were dropping their full holdings by the end of the third quarter. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the largest investment of all the hedgies monitored by Insider Monkey, totaling about $3 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also cut its stock, about $0.3 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to Amphastar Pharmaceuticals Inc (NASDAQ:AMPH). We will take a look at istar Inc (NYSE:STAR), Employers Holdings, Inc. (NYSE:EIG), DHT Holdings Inc (NYSE:DHT), Cardtronics plc (NASDAQ:CATM), Dyne Therapeutics, Inc. (NASDAQ:DYN), Denbury Inc. (NYSE:DEN), and Warrior Met Coal Inc. (NYSE:HCC). All of these stocks’ market caps are similar to AMPH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
STAR 14 102800 1
EIG 12 52197 0
DHT 24 129282 6
CATM 15 247410 -6
DYN 23 219240 23
DEN 9 298169 9
HCC 26 199815 5
Average 17.6 178416 5.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.6 hedge funds with bullish positions and the average amount invested in these stocks was $178 million. That figure was $17 million in AMPH’s case. Warrior Met Coal Inc. (NYSE:HCC) is the most popular stock in this table. On the other hand Denbury Inc. (NYSE:DEN) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) is even less popular than DEN. Our overall hedge fund sentiment score for AMPH is 24. 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. Hedge funds dodged a bullet by taking a bearish stance towards AMPH. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd but managed to beat the market again by 16 percentage points. Unfortunately AMPH wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); AMPH investors were disappointed as the stock returned -5% since the end of the third quarter (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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