We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) based on that data.
Hedge fund interest in Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) shares was flat at the end of last quarter. This is usually a negative indicator. 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 NextGen Healthcare, Inc. (NASDAQ:NXGN), Partner Communications Company Ltd (NASDAQ:PTNR), and General American Investors Company, Inc. (NYSE:GAM) to gather more data points. Our calculations also showed that AMPH isn't among the 30 most popular stocks among hedge funds (click for Q1 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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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David Harding of Winton Capital Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's check out the new hedge fund action encompassing Amphastar Pharmaceuticals Inc (NASDAQ:AMPH).
What does smart money think about Amphastar Pharmaceuticals Inc (NASDAQ:AMPH)?
Heading into the second quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AMPH over the last 18 quarters. With hedgies' capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Amphastar Pharmaceuticals Inc (NASDAQ:AMPH), which was worth $11 million at the end of the third quarter. On the second spot was Marshall Wace LLP which amassed $4.5 million worth of shares. AQR Capital Management, Citadel Investment Group, and Winton Capital 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 Marshall Wace LLP allocated the biggest weight to Amphastar Pharmaceuticals Inc (NASDAQ:AMPH), around 0.04% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, dishing out 0.03 percent of its 13F equity portfolio to AMPH.
Judging by the fact that Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) has witnessed falling interest from the smart money, we can see that there lies a certain "tier" of money managers that elected to cut their positions entirely by the end of the first quarter. It's worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital dumped the largest position of the "upper crust" of funds tracked by Insider Monkey, worth an estimated $10.1 million in stock, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors was right behind this move, as the fund said goodbye to about $1.4 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks similar to Amphastar Pharmaceuticals Inc (NASDAQ:AMPH). These stocks are NextGen Healthcare, Inc. (NASDAQ:NXGN), Partner Communications Company Ltd (NASDAQ:PTNR), General American Investors Company, Inc. (NYSE:GAM), and Myovant Sciences Ltd. (NYSE:MYOV). This group of stocks' market caps are similar to AMPH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NXGN,21,26574,5 PTNR,1,9964,-1 GAM,4,20575,0 MYOV,10,41859,0 Average,9,24743,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $20 million in AMPH's case. NextGen Healthcare, Inc. (NASDAQ:NXGN) is the most popular stock in this table. On the other hand Partner Communications Company Ltd (NASDAQ:PTNR) is the least popular one with only 1 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on AMPH as the stock returned 35.6% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.