Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The last 8 months is one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by nearly 9 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Amphastar Pharmaceuticals Inc (NASDAQ:AMPH).
Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) has experienced an increase in hedge fund interest lately. AMPH was in 10 hedge funds' portfolios at the end of the first quarter of 2019. There were 8 hedge funds in our database with AMPH holdings at the end of the previous quarter. Our calculations also showed that AMPH isn't among the 30 most popular stocks among hedge funds.
Today there are a lot of formulas investors use to evaluate stocks. A couple of the less known formulas are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the best investment managers can outpace the broader indices by a superb amount (see the details here).
We're going to check out the latest hedge fund action encompassing Amphastar Pharmaceuticals Inc (NASDAQ:AMPH).
What does smart money think about Amphastar Pharmaceuticals Inc (NASDAQ:AMPH)?
At Q1's end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards AMPH over the last 15 quarters. So, let's check out 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 $9 million at the end of the first quarter. On the second spot was Arrowstreet Capital which amassed $3.1 million worth of shares. Moreover, Two Sigma Advisors, AQR Capital Management, and Millennium Management were also bullish on Amphastar Pharmaceuticals Inc (NASDAQ:AMPH), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, key hedge funds were leading the bulls' herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most outsized position in Amphastar Pharmaceuticals Inc (NASDAQ:AMPH). Arrowstreet Capital had $3.1 million invested in the company at the end of the quarter. Benjamin A. Smith's Laurion Capital Management also initiated a $0.4 million position during the quarter. The other funds with new positions in the stock are David Harding's Winton Capital Management and Ken Griffin's Citadel Investment Group.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) but similarly valued. We will take a look at National Western Life Group, Inc. (NASDAQ:NWLI), PJT Partners Inc (NYSE:PJT), Triumph Group Inc (NYSE:TGI), and Granite Point Mortgage Trust Inc. (NYSE:GPMT). This group of stocks' market caps resemble AMPH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NWLI,9,15680,0 PJT,19,160622,1 TGI,12,44604,4 GPMT,12,43820,6 Average,13,66182,2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $66 million. That figure was $15 million in AMPH's case. PJT Partners Inc (NYSE:PJT) is the most popular stock in this table. On the other hand National Western Life Group, Inc. (NASDAQ:NWLI) is the least popular one with only 9 bullish hedge fund positions. Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately AMPH wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); AMPH investors were disappointed as the stock returned 1.9% during the same time period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.