The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing more than 750 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of September 30th, 2019. In this article we are going to take a look at smart money sentiment towards Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN).
Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) investors should pay attention to a decrease in hedge fund sentiment lately. BHVN was in 34 hedge funds' portfolios at the end of the third quarter of 2019. There were 38 hedge funds in our database with BHVN holdings at the end of the previous quarter. Our calculations also showed that BHVN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_364882" align="aligncenter" width="600"] Mark Kingdon of Kingdon Capital[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's analyze the fresh hedge fund action regarding Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN).
Hedge fund activity in Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN)
At the end of the third quarter, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BHVN over the last 17 quarters. With hedgies' capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Adage Capital Management was the largest shareholder of Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), with a stake worth $65.7 million reported as of the end of September. Trailing Adage Capital Management was Cormorant Asset Management, which amassed a stake valued at $53.5 million. Kingdon Capital, Citadel Investment Group, and Knoll Capital 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 Knoll Capital Management allocated the biggest weight to Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), around 32.74% of its portfolio. Ardsley Partners is also relatively very bullish on the stock, designating 6.21 percent of its 13F equity portfolio to BHVN.
Due to the fact that Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) has witnessed a decline in interest from the aggregate hedge fund industry, it's easy to see that there is a sect of fund managers that decided to sell off their full holdings last quarter. Interestingly, Jeffrey Jay and David Kroin's Great Point Partners cut the biggest position of the "upper crust" of funds tracked by Insider Monkey, comprising close to $15.3 million in stock, and Jonathan Barrett and Paul Segal's Luminus Management was right behind this move, as the fund said goodbye to about $12.6 million worth. These moves are interesting, as aggregate hedge fund interest fell by 4 funds last quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) but similarly valued. We will take a look at PQ Group Holdings Inc. (NYSE:PQG), PriceSmart, Inc. (NASDAQ:PSMT), Northwest Natural Gas Co (NYSE:NWN), and Tenable Holdings, Inc. (NASDAQ:TENB). All of these stocks' market caps resemble BHVN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PQG,7,55742,1 PSMT,9,50814,-6 NWN,16,63875,4 TENB,18,135666,1 Average,12.5,76524,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $77 million. That figure was $456 million in BHVN's case. Tenable Holdings, Inc. (NASDAQ:TENB) is the most popular stock in this table. On the other hand PQ Group Holdings Inc. (NYSE:PQG) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on BHVN as the stock returned 37.4% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.