Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow over 700 of the best-performing investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX) a cheap investment today? The best stock pickers are getting more bullish. The number of bullish hedge fund bets increased by 1 lately. Our calculations also showed that cprx isn't among the 30 most popular stocks among hedge funds. CPRX was in 15 hedge funds' portfolios at the end of the third quarter of 2018. There were 14 hedge funds in our database with CPRX positions at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a gander at the recent hedge fund action surrounding Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX).
What have hedge funds been doing with Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX)?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in CPRX heading into this year. So, let's find out 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, Mitchell Blutt's Consonance Capital Management has the largest position in Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX), worth close to $22.8 million, corresponding to 1.2% of its total 13F portfolio. The second largest stake is held by Broadfin Capital, managed by Kevin Kotler, which holds a $19.4 million position; 2.9% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that are bullish include Behzad Aghazadeh's venBio Select Advisor, Julian Baker and Felix Baker's Baker Bros. Advisors and Nathaniel August's Mangrove Partners.
Consequently, key hedge funds have jumped into Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX) headfirst. OrbiMed Advisors, managed by Samuel Isaly, initiated the most valuable position in Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX). OrbiMed Advisors had $4.2 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $0.1 million position during the quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX) but similarly valued. These stocks are Sterling Construction Company, Inc. (NASDAQ:STRL), Abraxas Petroleum Corp. (NASDAQ:AXAS), Accuray Incorporated (NASDAQ:ARAY), and Pensare Acquisition Corp. (NASDAQ:WRLS). This group of stocks' market values resemble CPRX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position STRL,12,60350,0 AXAS,10,39623,-5 ARAY,17,66381,2 WRLS,14,44660,0 Average,13.25,52754,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was $93 million in CPRX's case. Accuray Incorporated (NASDAQ:ARAY) is the most popular stock in this table. On the other hand Abraxas Petroleum Corp. (NASDAQ:AXAS) is the least popular one with only 10 bullish hedge fund positions. Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX) 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. In this regard ARAY might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.