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With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Amryt Pharma plc (NASDAQ:AMYT).
Is Amryt Pharma plc (NASDAQ:AMYT) the right investment to pursue these days? Investors who are in the know were getting more bullish. The number of long hedge fund bets increased by 4 lately. Amryt Pharma plc (NASDAQ:AMYT) was in 4 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that AMYT 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.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world 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. With all of this in mind we're going to take a glance at the recent hedge fund action regarding Amryt Pharma plc (NASDAQ:AMYT).
How are hedge funds trading Amryt Pharma plc (NASDAQ:AMYT)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4 from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in AMYT a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Stonepine Capital, managed by Timothy P. Lynch, holds the most valuable position in Amryt Pharma plc (NASDAQ:AMYT). Stonepine Capital has a $9.5 million position in the stock, comprising 9.8% of its 13F portfolio. Coming in second is Highbridge Capital Management, with a $8.3 million position; 0.4% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism include Steven Boyd's Armistice Capital, Andy Redleaf's Whitebox Advisors and . In terms of the portfolio weights assigned to each position Stonepine Capital allocated the biggest weight to Amryt Pharma plc (NASDAQ:AMYT), around 9.84% of its 13F portfolio. Highbridge Capital Management is also relatively very bullish on the stock, setting aside 0.45 percent of its 13F equity portfolio to AMYT.
As aggregate interest increased, key money managers have been driving this bullishness. Stonepine Capital, managed by Timothy P. Lynch, established the biggest position in Amryt Pharma plc (NASDAQ:AMYT). Stonepine Capital had $9.5 million invested in the company at the end of the quarter. Highbridge Capital Management also made a $8.3 million investment in the stock during the quarter. The other funds with brand new AMYT positions are Steven Boyd's Armistice Capital and Andy Redleaf's Whitebox Advisors.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Amryt Pharma plc (NASDAQ:AMYT) but similarly valued. We will take a look at REX American Resources Corp (NYSE:REX), Laird Superfood, Inc. (NYSE:LSF), Diamond Hill Investment Group, Inc. (NASDAQ:DHIL), BeyondSpring, Inc. (NASDAQ:BYSI), Sierra Wireless, Inc. (NASDAQ:SWIR), Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL), and Organogenesis Holdings Inc. (NASDAQ:ORGO). This group of stocks' market values are similar to AMYT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position REX,11,38427,2 LSF,12,37444,12 DHIL,9,42666,-1 BYSI,4,2153,-1 SWIR,7,101606,0 RIGL,20,79795,2 ORGO,2,3335,-1 Average,9.3,43632,1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.3 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $25 million in AMYT's case. Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) is the most popular stock in this table. On the other hand Organogenesis Holdings Inc. (NASDAQ:ORGO) is the least popular one with only 2 bullish hedge fund positions. Amryt Pharma plc (NASDAQ:AMYT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AMYT is 17.9. 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 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and surpassed the market again by 16.1 percentage points. Unfortunately AMYT wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); AMYT investors were disappointed as the stock returned 2.1% since the end of September (through 11/27) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.