Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don't publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That's why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze ANI Pharmaceuticals Inc (NASDAQ:ANIP) from the perspective of those elite funds.
ANI Pharmaceuticals Inc (NASDAQ:ANIP) investors should be aware of an increase in enthusiasm from smart money recently. ANIP was in 17 hedge funds' portfolios at the end of the third quarter of 2018. There were 11 hedge funds in our database with ANIP holdings at the end of the previous quarter. Our calculations also showed that ANIP isn't among the 30 most popular stocks among hedge funds.
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. 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.
We're going to review the fresh hedge fund action surrounding ANI Pharmaceuticals Inc (NASDAQ:ANIP).
What does the smart money think about ANI Pharmaceuticals Inc (NASDAQ:ANIP)?
At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 55% from the second quarter of 2018. On the other hand, there were a total of 13 hedge funds with a bullish position in ANIP at the beginning of this year. With hedge funds' capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
More specifically, Mangrove Partners was the largest shareholder of ANI Pharmaceuticals Inc (NASDAQ:ANIP), with a stake worth $29 million reported as of the end of September. Trailing Mangrove Partners was Renaissance Technologies, which amassed a stake valued at $10.1 million. Consonance Capital Management, Triarii Capital, and Weiss Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, specific money managers were leading the bulls' herd. Weiss Asset Management, managed by Andrew Weiss, established the most outsized position in ANI Pharmaceuticals Inc (NASDAQ:ANIP). Weiss Asset Management had $1.8 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $0.7 million position during the quarter. The other funds with new positions in the stock are Ken Griffin's Citadel Investment Group, Paul Marshall and Ian Wace's Marshall Wace LLP, and D. E. Shaw's D E Shaw.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as ANI Pharmaceuticals Inc (NASDAQ:ANIP) but similarly valued. These stocks are Argan, Inc. (NYSEAMEX:AGX), Dime Community Bancshares, Inc. (NASDAQ:DCOM), Kura Oncology, Inc. (NASDAQ:KURA), and Scorpio Tankers Inc. (NYSE:STNG). This group of stocks' market valuations are similar to ANIP's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AGX,17,117752,0 DCOM,13,43461,1 KURA,20,217308,2 STNG,14,62267,-1 Average,16,110197,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $110 million. That figure was $60 million in ANIP's case. Kura Oncology, Inc. (NASDAQ:KURA) is the most popular stock in this table. On the other hand Dime Community Bancshares, Inc. (NASDAQ:DCOM) is the least popular one with only 13 bullish hedge fund positions. ANI Pharmaceuticals Inc (NASDAQ:ANIP) 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 KURA might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.