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The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD).
Is ACAD a good stock to buy now? ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) has experienced a decrease in hedge fund interest recently. ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) was in 41 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 44. There were 44 hedge funds in our database with ACAD positions at the end of the second quarter. Our calculations also showed that ACAD 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.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Robert Pohly of Samlyn Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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 check out the key hedge fund action encompassing ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD).
Do Hedge Funds Think ACAD Is A Good Stock To Buy Now?
At Q3's end, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the previous quarter. By comparison, 27 hedge funds held shares or bullish call options in ACAD a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Baker Bros. Advisors was the largest shareholder of ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), with a stake worth $1728.6 million reported as of the end of September. Trailing Baker Bros. Advisors was Citadel Investment Group, which amassed a stake valued at $106 million. D E Shaw, Great Point Partners, and Palo Alto Investors 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 ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), around 7.13% of its 13F portfolio. Baker Bros. Advisors is also relatively very bullish on the stock, designating 6.91 percent of its 13F equity portfolio to ACAD.
Since ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) has witnessed bearish sentiment from the entirety of the hedge funds we track, logic holds that there were a few hedgies who sold off their positions entirely in the third quarter. Intriguingly, Arthur B Cohen and Joseph Healey's Healthcor Management LP dumped the largest investment of the 750 funds monitored by Insider Monkey, valued at about $49.7 million in stock. Principal Global Investors's fund, Columbus Circle Investors, also sold off its stock, about $19.8 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 3 funds in the third quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) but similarly valued. We will take a look at Tata Motors Limited (NYSE:TTM), Albertsons Companies, Inc. (NYSE:ACI), Lear Corporation (NYSE:LEA), JOYY Inc. (NASDAQ:YY), Reliance Steel & Aluminum Co. (NYSE:RS), The Interpublic Group of Companies Inc (NYSE:IPG), and PRA Health Sciences Inc (NASDAQ:PRAH). All of these stocks' market caps are similar to ACAD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TTM,10,34390,1 ACI,26,2159342,-4 LEA,44,975002,3 YY,31,536084,3 RS,30,267133,3 IPG,31,486054,9 PRAH,24,168019,-9 Average,28,660861,0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $661 million. That figure was $2412 million in ACAD's case. Lear Corporation (NYSE:LEA) is the most popular stock in this table. On the other hand Tata Motors Limited (NYSE:TTM) is the least popular one with only 10 bullish hedge fund positions. ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ACAD is 75.5. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on ACAD as the stock returned 26.4% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.