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How Did Amarin Corporation plc (AMRN) Compare Against Top Hedge Fund Stocks in 2019?

Reymerlyn Martin

While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the third quarter and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Amarin Corporation plc (NASDAQ:AMRN) and see how the stock performed in comparison to hedge funds' consensus picks.

Is Amarin Corporation plc (NASDAQ:AMRN) a safe stock to buy now? Money managers are taking a pessimistic view. The number of bullish hedge fund positions went down by 4 in recent months. Our calculations also showed that AMRN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

In the 21st century investor’s toolkit there are tons of gauges shareholders have at their disposal to value their stock investments. A pair of the most under-the-radar gauges are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can trounce their index-focused peers by a healthy amount (see the details here).

[caption id="attachment_315176" align="aligncenter" width="600"] Michael Castor of Sio Capital[/caption]

Michael Castor of Sio Capital

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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock is still extremely cheap despite already gaining 20 percent. With all of this in mind we're going to take a look at the new hedge fund action surrounding Amarin Corporation plc (NASDAQ:AMRN).

Hedge fund activity in Amarin Corporation plc (NASDAQ:AMRN)

Heading into the fourth quarter of 2019, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards AMRN over the last 17 quarters. So, let's see 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, Baker Bros. Advisors, managed by Julian Baker and Felix Baker, holds the biggest position in Amarin Corporation plc (NASDAQ:AMRN). Baker Bros. Advisors has a $629.8 million position in the stock, comprising 4.3% of its 13F portfolio. Sitting at the No. 2 spot is Behzad Aghazadeh of venBio Select Advisor, with a $129.2 million position; the fund has 5.4% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish comprise Joseph Edelman's Perceptive Advisors, Mitchell Blutt's Consonance Capital Management and Kris Jenner, Gordon Bussard, Graham McPhail's Rock Springs Capital Management. In terms of the portfolio weights assigned to each position Consonance Capital Management allocated the biggest weight to Amarin Corporation plc (NASDAQ:AMRN), around 9.59% of its 13F portfolio. Eversept Partners is also relatively very bullish on the stock, setting aside 6.29 percent of its 13F equity portfolio to AMRN.

Seeing as Amarin Corporation plc (NASDAQ:AMRN) has witnessed a decline in interest from the entirety of the hedge funds we track, we can see that there lies a certain "tier" of fund managers that slashed their entire stakes last quarter. At the top of the heap, Steve Cohen's Point72 Asset Management dumped the biggest stake of all the hedgies tracked by Insider Monkey, totaling an estimated $85.6 million in stock. Arthur B Cohen and Joseph Healey's fund, Healthcor Management, also said goodbye to its stock, about $59.1 million worth. These transactions are interesting, as total hedge fund interest was cut by 4 funds last quarter.

Let's check out hedge fund activity in other stocks similar to Amarin Corporation plc (NASDAQ:AMRN). These stocks are Grupo Aeroportuario del Pacifico (NYSE:PAC), L Brands Inc (NYSE:LB), Tripadvisor Inc (NASDAQ:TRIP), and Flex Ltd. (NASDAQ:FLEX). All of these stocks' market caps resemble AMRN's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PAC,3,93322,-1 LB,36,542095,6 TRIP,29,1050535,3 FLEX,31,1478106,-3 Average,24.75,791015,1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $791 million. That figure was $1393 million in AMRN's case. L Brands Inc (NYSE:LB) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Pacifico (NYSE:PAC) is the least popular one with only 3 bullish hedge fund positions. Amarin Corporation plc (NASDAQ:AMRN) is not the most popular stock in this group but hedge fund interest is still above average. 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 10.1 percentage points. Hedge funds were also right about betting on AMRN as the stock returned 57.5% in 2019 and outperformed the market. Hedge funds were rewarded for their relative bullishness. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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

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