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Is ESPR A Good Stock To Buy Now?

Abigail Fisher
·6 min read

We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article, we look at what those funds think of Esperion Therapeutics, Inc. (NASDAQ:ESPR) based on that data.

Is ESPR a good stock to buy now? Investors who are in the know were cutting their exposure. The number of bullish hedge fund bets were trimmed by 2 lately. Esperion Therapeutics, Inc. (NASDAQ:ESPR) was in 17 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 22. Our calculations also showed that ESPR 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.

According to most traders, hedge funds are assumed to be worthless, old investment tools of yesteryear. While there are greater than 8000 funds in operation at the moment, Our researchers choose to focus on the top tier of this group, approximately 850 funds. Most estimates calculate that this group of people watch over the lion's share of the smart money's total asset base, and by keeping an eye on their first-class equity investments, Insider Monkey has figured out various investment strategies that have historically outstripped Mr. Market. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Henrik Rhenman of Rhenman & Partners Asset Management

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 15 best blue chip stocks 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. 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 website. With all of this in mind we're going to take a peek at the fresh hedge fund action regarding Esperion Therapeutics, Inc. (NASDAQ:ESPR).

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

Heading into the fourth quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. By comparison, 16 hedge funds held shares or bullish call options in ESPR 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.

More specifically, Pentwater Capital Management was the largest shareholder of Esperion Therapeutics, Inc. (NASDAQ:ESPR), with a stake worth $80.6 million reported as of the end of September. Trailing Pentwater Capital Management was Marshall Wace LLP, which amassed a stake valued at $50.8 million. Platinum Asset Management, Rhenman & Partners Asset Management, and Millennium Management 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 Rhenman & Partners Asset Management allocated the biggest weight to Esperion Therapeutics, Inc. (NASDAQ:ESPR), around 1.5% of its 13F portfolio. Endurant Capital Management is also relatively very bullish on the stock, earmarking 1.49 percent of its 13F equity portfolio to ESPR.

Because Esperion Therapeutics, Inc. (NASDAQ:ESPR) has witnessed a decline in interest from the entirety of the hedge funds we track, it's easy to see that there were a few hedgies who were dropping their positions entirely by the end of the third quarter. Interestingly, Peter Muller's PDT Partners cut the biggest position of the 750 funds watched by Insider Monkey, comprising about $4.7 million in stock, and Dmitry Balyasny's Balyasny Asset Management was right behind this move, as the fund dumped about $3.2 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Esperion Therapeutics, Inc. (NASDAQ:ESPR) but similarly valued. These stocks are BrightSphere Investment Group Inc (NYSE:BSIG), PGT Innovations Inc. (NYSE:PGTI), EVO Payments, Inc. (NASDAQ:EVOP), Brooge Energy Limited (NASDAQ:BROG), GMS Inc. (NYSE:GMS), US Ecology Inc. (NASDAQ:ECOL), and AudioCodes Ltd. (NASDAQ:AUDC). This group of stocks' market values resemble ESPR's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BSIG,25,374125,3 PGTI,11,79133,0 EVOP,15,34698,1 BROG,6,35733,0 GMS,18,99280,1 ECOL,12,25411,-4 AUDC,9,25983,-3 Average,13.7,96338,-0.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.7 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $222 million in ESPR's case. BrightSphere Investment Group Inc (NYSE:BSIG) is the most popular stock in this table. On the other hand Brooge Energy Limited (NASDAQ:BROG) is the least popular one with only 6 bullish hedge fund positions. Esperion Therapeutics, Inc. (NASDAQ:ESPR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ESPR is 55.1. 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 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 December 14th and beat the market again by 15.8 percentage points. Unfortunately ESPR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ESPR were disappointed as the stock returned -20.4% since the end of September (through 12/14) 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.

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

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