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Assertio Holdings Inc. (ASRT) Fell Out Of Favor With Hedge Funds

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In this article we will analyze whether Assertio Holdings Inc. (NASDAQ:ASRT) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Assertio Holdings Inc. (NASDAQ:ASRT) was in 6 hedge funds' portfolios at the end of March. The all time high for this statistic is 20. ASRT investors should pay attention to a decrease in activity from the world's largest hedge funds recently. There were 7 hedge funds in our database with ASRT positions at the end of the fourth quarter. Our calculations also showed that ASRT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

David E. Shaw of D.E. Shaw
David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let's view the fresh hedge fund action encompassing Assertio Holdings Inc. (NASDAQ:ASRT).

Do Hedge Funds Think ASRT Is A Good Stock To Buy Now?

At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in ASRT a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Highbridge Capital Management was the largest shareholder of Assertio Holdings Inc. (NASDAQ:ASRT), with a stake worth $4.2 million reported as of the end of March. Trailing Highbridge Capital Management was Renaissance Technologies, which amassed a stake valued at $2.7 million. D E Shaw, Citadel Investment Group, and Citadel Investment Group 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 Highbridge Capital Management allocated the biggest weight to Assertio Holdings Inc. (NASDAQ:ASRT), around 0.17% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.0033 percent of its 13F equity portfolio to ASRT.

Since Assertio Holdings Inc. (NASDAQ:ASRT) has witnessed a decline in interest from the aggregate hedge fund industry, logic holds that there is a sect of hedge funds who sold off their full holdings by the end of the first quarter. It's worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital dumped the biggest investment of the "upper crust" of funds watched by Insider Monkey, comprising about $0.1 million in stock. David Harding's fund, Winton Capital Management, also sold off its stock, about $0.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 1 funds by the end of the first quarter.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Assertio Holdings Inc. (NASDAQ:ASRT) but similarly valued. We will take a look at Performant Financial Corp (NASDAQ:PFMT), TDH Holdings, Inc. (NASDAQ:PETZ), OFS Capital Corp (NASDAQ:OFS), Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS), Prudential Bancorp, Inc. (NASDAQ:PBIP), One Stop Systems, Inc. (NASDAQ:OSS), and Liquidia Corporation (NASDAQ:LQDA). This group of stocks' market values resemble ASRT's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PFMT,7,39551,4 PETZ,2,484,1 OFS,3,451,1 CRVS,11,50567,5 PBIP,1,5992,-1 OSS,3,505,0 LQDA,7,8134,0 Average,4.9,15098,1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.9 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $8 million in ASRT's case. Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS) is the most popular stock in this table. On the other hand Prudential Bancorp, Inc. (NASDAQ:PBIP) is the least popular one with only 1 bullish hedge fund positions. Assertio Holdings Inc. (NASDAQ:ASRT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ASRT is 38. 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 positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately ASRT wasn't nearly as popular as these 5 stocks and hedge funds that were betting on ASRT were disappointed as the stock returned -40.4% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.