Arena Pharmaceuticals, Inc. (ARNA): One Mind-Blowing Metric Screaming ‘Buy’ By Arnold Frias in News
Published: April 25, 2013 at 11:01 am
Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) an exceptional investment now? Prominent investors are taking a bullish view. The number of bullish hedge fund positions moved up by 3 recently.
In the 21st century investor’s toolkit, there are many methods market participants can use to track Mr. Market. Two of the best are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top hedge fund managers can outperform their index-focused peers by a very impressive margin (see just how much).
Equally as integral, optimistic insider trading sentiment is another way to parse down the financial markets. Just as you'd expect, there are lots of incentives for a bullish insider to cut shares of his or her company, but only one, very simple reason why they would buy. Many academic studies have demonstrated the impressive potential of this strategy if "monkeys" know what to do (learn more here).
Now, we're going to take a peek at the key action regarding Arena Pharmaceuticals, Inc. (NASDAQ:ARNA). What have hedge funds been doing with Arena Pharmaceuticals, Inc. (NASDAQ:ARNA)? In preparation for this year, a total of 11 of the hedge funds we track held long positions in this stock, a change of 38% from the previous quarter. With hedge funds' capital changing hands, there exists a few key hedge fund managers who were increasing their stakes significantly.
Arena Pharmaceuticals, Inc. (NASDAQ:ARNA)According to our comprehensive database, Deerfield Management, managed by James E. Flynn, holds the most valuable position in Arena Pharmaceuticals, Inc. (NASDAQ:ARNA). Deerfield Management has a $67.5 million position in the stock, comprising 3.7% of its 13F portfolio. On Deerfield Management's heels is Daniel Gold of QVT Financial, with a $14.9 million position; the fund has 1% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Drew Cupps's Cupps Capital Management, D. E. Shaw's D E Shaw and Ken Griffin's Citadel Investment Group.
As one would reasonably expect, specific money managers have been driving this bullishness. Dialectic Capital Management, managed by John Fichthorn, created the largest position in Arena Pharmaceuticals, Inc. (NASDAQ:ARNA). Dialectic Capital Management had 1.1 million invested in the company at the end of the quarter. Glenn Russell Dubin's Highbridge Capital Management also made a $0.5 million investment in the stock during the quarter. The other funds with brand new ARNA positions are Israel Englander's Millennium Management and Gregory Fraser, Rudolph Kluiber, and Timothy Kroch's GRT Capital Partners.
What have insiders been doing with Arena Pharmaceuticals, Inc. (NASDAQ:ARNA)?
Bullish insider trading is most useful when the primary stock in question has seen transactions within the past half-year. Over the latest six-month time period, Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).
Let's also take a look at hedge fund and insider activity in other stocks similar to Arena Pharmaceuticals, Inc. (NASDAQ:ARNA). These stocks are Charles River Laboratories (NYSE:CRL), Synageva BioPharma Corp (NASDAQ:GEVA), Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), Viropharma Inc (NASDAQ:VPHM), and Questcor Pharmaceuticals Inc (NASDAQ:QCOR). This group of stocks belong to the biotechnology industry and their market caps are closest to ARNA's market cap.
Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Charles River Laboratories (NYSE:CRL) 20 0 7
Synageva BioPharma Corp (NASDAQ:GEVA) 6 3 5
Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) 10 1 6
Viropharma Inc (NASDAQ:VPHM) 20 1 5
Questcor Pharmaceuticals Inc (NASDAQ:QCOR) 21 2 2
With the returns shown by the aforementioned tactics, everyday investors must always pay attention to hedge fund and insider trading sentiment, and Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) shareholders fit into this picture quite nicely.