Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Strongbridge Biopharma plc (NASDAQ:SBBP).
Strongbridge Biopharma plc (NASDAQ:SBBP) shareholders have witnessed a decrease in activity from the world's largest hedge funds in recent months. SBBP was in 9 hedge funds' portfolios at the end of September. There were 10 hedge funds in our database with SBBP positions at the end of the previous quarter. Our calculations also showed that SBBP isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most investors, hedge funds are assumed to be underperforming, old investment tools of years past. While there are over 8000 funds in operation at present, We hone in on the top tier of this group, around 750 funds. It is estimated that this group of investors manage most of all hedge funds' total asset base, and by keeping an eye on their inimitable investments, Insider Monkey has spotted various investment strategies that have historically exceeded the broader indices. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_261247" align="alignnone" width="600"] Kevin Kotler of Broadfin Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's take a glance at the latest hedge fund action surrounding Strongbridge Biopharma plc (NASDAQ:SBBP).
What have hedge funds been doing with Strongbridge Biopharma plc (NASDAQ:SBBP)?
At Q3's end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SBBP over the last 17 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Broadfin Capital was the largest shareholder of Strongbridge Biopharma plc (NASDAQ:SBBP), with a stake worth $6.2 million reported as of the end of September. Trailing Broadfin Capital was Prosight Capital, which amassed a stake valued at $6 million. Hudson Bay Capital Management, 683 Capital Partners, and D E Shaw 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 Prosight Capital allocated the biggest weight to Strongbridge Biopharma plc (NASDAQ:SBBP), around 3.33% of its 13F portfolio. Broadfin Capital is also relatively very bullish on the stock, dishing out 1.14 percent of its 13F equity portfolio to SBBP.
Since Strongbridge Biopharma plc (NASDAQ:SBBP) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there exists a select few hedge funds that decided to sell off their entire stakes by the end of the third quarter. At the top of the heap, Steven Boyd's Armistice Capital sold off the biggest position of the 750 funds tracked by Insider Monkey, comprising about $4.9 million in stock, and Peter S. Park's Park West Asset Management was right behind this move, as the fund said goodbye to about $0.2 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 1 funds by the end of the third quarter.
Let's also examine hedge fund activity in other stocks similar to Strongbridge Biopharma plc (NASDAQ:SBBP). We will take a look at Ion Geophysical Corp (NYSE:IO), Kala Pharmaceuticals, Inc. (NASDAQ:KALA), Nymox Pharmaceutical Corporation (NASDAQ:NYMX), and ConforMIS, Inc. (NASDAQ:CFMS). This group of stocks' market values are closest to SBBP's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IO,6,14738,-1 KALA,9,41580,1 NYMX,4,960,0 CFMS,8,25765,1 Average,6.75,20761,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $23 million in SBBP's case. Kala Pharmaceuticals, Inc. (NASDAQ:KALA) is the most popular stock in this table. On the other hand Nymox Pharmaceutical Corporation (NASDAQ:NYMX) is the least popular one with only 4 bullish hedge fund positions. Strongbridge Biopharma plc (NASDAQ:SBBP) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately SBBP wasn't nearly as popular as these 20 stocks and hedge funds that were betting on SBBP were disappointed as the stock returned -24.3% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.