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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 Pacira Biosciences Inc (NASDAQ:PCRX).
Is Pacira Biosciences Inc (NASDAQ:PCRX) the right investment to pursue these days? Hedge funds were betting on the stock. The number of long hedge fund bets inched up by 3 in recent months. Pacira Biosciences Inc (NASDAQ:PCRX) was in 23 hedge funds' portfolios at the end of June. The all time high for this statistic is 31. Our calculations also showed that PCRX isn't among the 30 most popular stocks among hedge funds (click for Q2 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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
John Paulson of Paulson & Co
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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 check out the new hedge fund action regarding Pacira Biosciences Inc (NASDAQ:PCRX).
Do Hedge Funds Think PCRX Is A Good Stock To Buy Now?
At Q2's end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PCRX over the last 24 quarters. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
The largest stake in Pacira Biosciences Inc (NASDAQ:PCRX) was held by Renaissance Technologies, which reported holding $125 million worth of stock at the end of June. It was followed by Paulson & Co with a $77.3 million position. Other investors bullish on the company included Deerfield Management, Rock Springs Capital Management, and Tamarack Capital Management. In terms of the portfolio weights assigned to each position Tamarack Capital Management allocated the biggest weight to Pacira Biosciences Inc (NASDAQ:PCRX), around 6.19% of its 13F portfolio. Paulson & Co is also relatively very bullish on the stock, earmarking 1.85 percent of its 13F equity portfolio to PCRX.
As aggregate interest increased, key hedge funds have jumped into Pacira Biosciences Inc (NASDAQ:PCRX) headfirst. AlphaCrest Capital Management, managed by Mika Toikka, assembled the biggest position in Pacira Biosciences Inc (NASDAQ:PCRX). AlphaCrest Capital Management had $1.1 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley's Polar Capital also initiated a $1.1 million position during the quarter. The following funds were also among the new PCRX investors: Peter Muller's PDT Partners, Jinghua Yan's TwinBeech Capital, and Alec Litowitz and Ross Laser's Magnetar Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Pacira Biosciences Inc (NASDAQ:PCRX) but similarly valued. These stocks are JinkoSolar Holding Co., Ltd. (NYSE:JKS), Pactiv Evergreen Inc. (NASDAQ:PTVE), Callon Petroleum Company (NYSE:CPE), Rambus Inc. (NASDAQ:RMBS), IGM Biosciences, Inc. (NASDAQ:IGMS), Vista Outdoor Inc (NYSE:VSTO), and Perficient, Inc. (NASDAQ:PRFT). All of these stocks' market caps resemble PCRX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JKS,7,23960,-6 PTVE,6,112761,-3 CPE,17,87152,1 RMBS,20,381705,-3 IGMS,13,739582,-5 VSTO,24,408981,2 PRFT,18,108591,-4 Average,15,266105,-2.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $266 million. That figure was $433 million in PCRX's case. Vista Outdoor Inc (NYSE:VSTO) is the most popular stock in this table. On the other hand Pactiv Evergreen Inc. (NASDAQ:PTVE) is the least popular one with only 6 bullish hedge fund positions. Pacira Biosciences Inc (NASDAQ:PCRX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PCRX is 77.5. 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately PCRX wasn't nearly as popular as these 5 stocks and hedge funds that were betting on PCRX were disappointed as the stock returned -13.3% since the end of June (through 10/22) 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.