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 Amarin Corporation plc (NASDAQ:AMRN).
Is Amarin Corporation plc (NASDAQ:AMRN) a superb investment now? The best stock pickers are betting on the stock. The number of long hedge fund positions rose by 7 in recent months. Our calculations also showed that AMRN isn't among the 30 most popular stocks among hedge funds (see the video below). AMRN was in 33 hedge funds' portfolios at the end of June. There were 26 hedge funds in our database with AMRN holdings at the end of the previous quarter. 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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a peek at the latest hedge fund action surrounding Amarin Corporation plc (NASDAQ:AMRN).
Hedge fund activity in Amarin Corporation plc (NASDAQ:AMRN)
At the end of the second quarter, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in AMRN a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Baker Bros. Advisors held the most valuable stake in Amarin Corporation plc (NASDAQ:AMRN), which was worth $805.5 million at the end of the second quarter. On the second spot was Consonance Capital Management which amassed $167 million worth of shares. Moreover, venBio Select Advisor, Perceptive Advisors, and Rock Springs Capital Management were also bullish on Amarin Corporation plc (NASDAQ:AMRN), allocating a large percentage of their portfolios to this stock.
Consequently, specific money managers have jumped into Amarin Corporation plc (NASDAQ:AMRN) headfirst. Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, established the most outsized position in Amarin Corporation plc (NASDAQ:AMRN). Healthcor Management LP had $59.1 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also made a $19.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Kevin Kotler's Broadfin Capital, Louis Bacon's Moore Global Investments, and Dmitry Balyasny's Balyasny Asset Management.
Let's go over hedge fund activity in other stocks similar to Amarin Corporation plc (NASDAQ:AMRN). These stocks are HubSpot Inc (NYSE:HUBS), AngloGold Ashanti Limited (NYSE:AU), Genpact Limited (NYSE:G), and L Brands Inc (NYSE:LB). This group of stocks' market caps are closest to AMRN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HUBS,33,692636,4 AU,16,479675,-7 G,26,744096,-3 LB,30,644900,-2 Average,26.25,640327,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.25 hedge funds with bullish positions and the average amount invested in these stocks was $640 million. That figure was $1836 million in AMRN's case. HubSpot Inc (NYSE:HUBS) is the most popular stock in this table. On the other hand AngloGold Ashanti Limited (NYSE:AU) is the least popular one with only 16 bullish hedge fund positions. Amarin Corporation plc (NASDAQ:AMRN) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately AMRN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on AMRN were disappointed as the stock returned -21.8% during the third quarter 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.