How do we determine whether Collegium Pharmaceutical Inc (NASDAQ:COLL) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Is Collegium Pharmaceutical Inc (NASDAQ:COLL) a bargain? Investors who are in the know are taking a bullish view. The number of long hedge fund positions moved up by 7 lately. Our calculations also showed that COLL isn't among the 30 most popular stocks among hedge funds. COLL was in 20 hedge funds' portfolios at the end of March. There were 13 hedge funds in our database with COLL holdings at the end of the previous quarter.
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 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a glance at the latest hedge fund action surrounding Collegium Pharmaceutical Inc (NASDAQ:COLL).
What have hedge funds been doing with Collegium Pharmaceutical Inc (NASDAQ:COLL)?
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 54% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in COLL a year ago. With hedge funds' capital changing hands, there exists a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Among these funds, Frazier Healthcare Partners held the most valuable stake in Collegium Pharmaceutical Inc (NASDAQ:COLL), which was worth $28.6 million at the end of the first quarter. On the second spot was Rock Springs Capital Management which amassed $23.9 million worth of shares. Moreover, Sectoral Asset Management, Maverick Capital, and Cormorant Asset Management were also bullish on Collegium Pharmaceutical Inc (NASDAQ:COLL), allocating a large percentage of their portfolios to this stock.
Consequently, key hedge funds were leading the bulls' herd. Maverick Capital, managed by Lee Ainslie, assembled the most valuable position in Collegium Pharmaceutical Inc (NASDAQ:COLL). Maverick Capital had $6 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also initiated a $2.1 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace's Marshall Wace LLP, Andrew Feldstein and Stephen Siderow's Blue Mountain Capital, and Peter Algert and Kevin Coldiron's Algert Coldiron Investors.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Collegium Pharmaceutical Inc (NASDAQ:COLL) but similarly valued. We will take a look at Ciner Resources LP (NYSE:CINR), Assembly Biosciences Inc (NASDAQ:ASMB), Barings BDC, Inc. (NYSE:BBDC), and Forty Seven, Inc. (NASDAQ:FTSV). This group of stocks' market valuations resemble COLL's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CINR,1,6943,-1 ASMB,19,132468,1 BBDC,12,17484,2 FTSV,8,28475,2 Average,10,46343,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $87 million in COLL's case. Assembly Biosciences Inc (NASDAQ:ASMB) is the most popular stock in this table. On the other hand Ciner Resources LP (NYSE:CINR) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Collegium Pharmaceutical Inc (NASDAQ:COLL) 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 COLL wasn't nearly as popular as these 20 stocks and hedge funds that were betting on COLL were disappointed as the stock returned -23.6% 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.