In this article we will analyze whether Travere Therapeutics, Inc. (NASDAQ:TVTX) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Travere Therapeutics, Inc. (NASDAQ:TVTX) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 27 hedge funds’ portfolios at the end of the first quarter of 2021. Our calculations also showed that TVTX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Alphatec Holdings Inc (NASDAQ:ATEC), Compass Diversified Holdings (NYSE:CODI), and PGT Innovations Inc. (NASDAQ:PGTI) to gather more data points.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s go over the recent hedge fund action regarding Travere Therapeutics, Inc. (NASDAQ:TVTX).
Do Hedge Funds Think TVTX Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TVTX over the last 23 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, RA Capital Management held the most valuable stake in Travere Therapeutics, Inc. (NASDAQ:TVTX), which was worth $140.2 million at the end of the fourth quarter. On the second spot was Adage Capital Management which amassed $113.6 million worth of shares. Perceptive Advisors, Armistice Capital, 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 Great Point Partners allocated the biggest weight to Travere Therapeutics, Inc. (NASDAQ:TVTX), around 3.06% of its 13F portfolio. RA Capital Management is also relatively very bullish on the stock, setting aside 2.11 percent of its 13F equity portfolio to TVTX.
Because Travere Therapeutics, Inc. (NASDAQ:TVTX) has faced falling interest from hedge fund managers, we can see that there is a sect of funds who were dropping their entire stakes by the end of the first quarter. Interestingly, Matt Sirovich and Jeremy Mindich’s Scopia Capital sold off the biggest stake of all the hedgies followed by Insider Monkey, totaling about $20.2 million in stock. Ken Greenberg and David Kim’s fund, Ghost Tree Capital, also sold off its stock, about $12.9 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Travere Therapeutics, Inc. (NASDAQ:TVTX) but similarly valued. These stocks are Alphatec Holdings Inc (NASDAQ:ATEC), Compass Diversified Holdings (NYSE:CODI), PGT Innovations Inc. (NASDAQ:PGTI), Dine Brands Global, Inc. (NYSE:DIN), Sixth Street Specialty Lending Inc (NYSE:TSLX), Zomedica Pharmaceuticals Corp. (NYSE:ZOM), and Ladder Capital Corp (NYSE:LADR). All of these stocks’ market caps are similar to TVTX’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.3 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $662 million in TVTX’s case. Dine Brands Global, Inc. (NYSE:DIN) is the most popular stock in this table. On the other hand Compass Diversified Holdings (NYSE:CODI) is the least popular one with only 5 bullish hedge fund positions. Travere Therapeutics, Inc. (NASDAQ:TVTX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TVTX is 82.8. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 24% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately TVTX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TVTX were disappointed as the stock returned -40.6% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.