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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 AcelRx Pharmaceuticals Inc (NASDAQ:ACRX).
AcelRx Pharmaceuticals Inc (NASDAQ:ACRX) investors should be aware of a decrease in hedge fund sentiment lately. ACRX was in 3 hedge funds' portfolios at the end of March. There were 7 hedge funds in our database with ACRX holdings at the end of the previous quarter. Our calculations also showed that ACRX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 44 percentage points since March 2017 (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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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David E. Shaw of D.E. Shaw[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital's Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to take a peek at the latest hedge fund action regarding AcelRx Pharmaceuticals Inc (NASDAQ:ACRX).
How are hedge funds trading AcelRx Pharmaceuticals Inc (NASDAQ:ACRX)?
Heading into the second quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -57% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ACRX over the last 18 quarters. With hedge funds' capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, D. E. Shaw's D E Shaw has the most valuable position in AcelRx Pharmaceuticals Inc (NASDAQ:ACRX), worth close to $0.9 million, amounting to less than 0.1%% of its total 13F portfolio. Coming in second is Citadel Investment Group, led by Ken Griffin, holding a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that hold long positions consist of Ken Griffin's Citadel Investment Group, Israel Englander's Millennium Management and . In terms of the portfolio weights assigned to each position D E Shaw allocated the biggest weight to AcelRx Pharmaceuticals Inc (NASDAQ:ACRX), around 0.0014% of its 13F portfolio. Citadel Investment Group is also relatively very bullish on the stock, setting aside 0.0001 percent of its 13F equity portfolio to ACRX.
Seeing as AcelRx Pharmaceuticals Inc (NASDAQ:ACRX) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of funds who sold off their positions entirely in the third quarter. It's worth mentioning that Paul Marshall and Ian Wace's Marshall Wace LLP said goodbye to the biggest investment of the "upper crust" of funds tracked by Insider Monkey, valued at an estimated $0.4 million in stock, and Daniel S. Och's OZ Management was right behind this move, as the fund said goodbye to about $0.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 4 funds in the third quarter.
Let's go over hedge fund activity in other stocks similar to AcelRx Pharmaceuticals Inc (NASDAQ:ACRX). These stocks are Bel Fuse, Inc. (NASDAQ:BELFA), RCI Hospitality Holdings, Inc. (NASDAQ:RICK), Alaska Communications Systems Group Inc (NASDAQ:ALSK), and Zagg Inc (NASDAQ:ZAGG). All of these stocks' market caps resemble ACRX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BELFA,4,2975,0 RICK,10,7475,1 ALSK,8,5978,3 ZAGG,8,19992,-1 Average,7.5,9105,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $1 million in ACRX's case. RCI Hospitality Holdings, Inc. (NASDAQ:RICK) is the most popular stock in this table. On the other hand Bel Fuse, Inc. (NASDAQ:BELFA) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks AcelRx Pharmaceuticals Inc (NASDAQ:ACRX) is even less popular than BELFA. Hedge funds clearly dropped the ball on ACRX as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd and still beat the market by 15.6 percentage points. A small number of hedge funds were also right about betting on ACRX as the stock returned 28.8% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.