There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don't cover. Because of Carl Icahn and other elite funds' exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Neurocrine Biosciences, Inc. (NASDAQ:NBIX).
Is Neurocrine Biosciences, Inc. (NASDAQ:NBIX) a buy right now? Investors who are in the know are becoming less hopeful. The number of long hedge fund bets were trimmed by 2 recently. Our calculations also showed that NBIX isn't among the 30 most popular stocks among hedge funds.
In the eyes of most shareholders, hedge funds are viewed as unimportant, old investment tools of the past. While there are greater than 8000 funds in operation at present, Our experts choose to focus on the leaders of this club, about 750 funds. These money managers control the majority of all hedge funds' total asset base, and by following their first-class investments, Insider Monkey has formulated a number of investment strategies that have historically beaten Mr. Market. Insider Monkey's flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points per year since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
We're going to analyze the fresh hedge fund action encompassing Neurocrine Biosciences, Inc. (NASDAQ:NBIX).
What does the smart money think about Neurocrine Biosciences, Inc. (NASDAQ:NBIX)?
Heading into the second quarter of 2019, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in NBIX over the last 15 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Among these funds, Perceptive Advisors held the most valuable stake in Neurocrine Biosciences, Inc. (NASDAQ:NBIX), which was worth $331.1 million at the end of the first quarter. On the second spot was OrbiMed Advisors which amassed $161.5 million worth of shares. Moreover, Healthcor Management LP, Baker Bros. Advisors, and Rock Springs Capital Management were also bullish on Neurocrine Biosciences, Inc. (NASDAQ:NBIX), allocating a large percentage of their portfolios to this stock.
Due to the fact that Neurocrine Biosciences, Inc. (NASDAQ:NBIX) has faced falling interest from the aggregate hedge fund industry, we can see that there exists a select few funds who sold off their positions entirely in the third quarter. Interestingly, Principal Global Investors's Columbus Circle Investors sold off the largest investment of the 700 funds watched by Insider Monkey, worth close to $24.5 million in stock, and Doug Silverman and Alexander Klabin's Senator Investment Group was right behind this move, as the fund dropped about $21.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds in the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to Neurocrine Biosciences, Inc. (NASDAQ:NBIX). We will take a look at MongoDB, Inc. (NASDAQ:MDB), BorgWarner Inc. (NYSE:BWA), Post Holdings Inc (NYSE:POST), and Momo Inc (NASDAQ:MOMO). This group of stocks' market caps match NBIX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MDB,27,961692,4 BWA,21,667423,-1 POST,27,1333879,-1 MOMO,21,826292,0 Average,24,947322,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $947 million. That figure was $1105 million in NBIX's case. MongoDB, Inc. (NASDAQ:MDB) is the most popular stock in this table. On the other hand BorgWarner Inc. (NYSE:BWA) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Neurocrine Biosciences, Inc. (NASDAQ:NBIX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately NBIX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on NBIX were disappointed as the stock returned -5.6% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.