Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Eagle Pharmaceuticals Inc (NASDAQ:EGRX).
Eagle Pharmaceuticals Inc (NASDAQ:EGRX) investors should be aware of a decrease in enthusiasm from smart money recently. EGRX was in 19 hedge funds' portfolios at the end of September. There were 20 hedge funds in our database with EGRX holdings at the end of the previous quarter. Our calculations also showed that egrx isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a look at the fresh hedge fund action encompassing Eagle Pharmaceuticals Inc (NASDAQ:EGRX).
How are hedge funds trading Eagle Pharmaceuticals Inc (NASDAQ:EGRX)?
At Q3's end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards EGRX over the last 13 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Douglas Braunstein and James Wooleryá's Hudson Executive Capital has the largest position in Eagle Pharmaceuticals Inc (NASDAQ:EGRX), worth close to $67.3 million, corresponding to 5.4% of its total 13F portfolio. Coming in second is David Cohen and Harold Levy of Iridian Asset Management, with a $64.9 million position; 0.6% of its 13F portfolio is allocated to the company. Other peers with similar optimism contain Peter S. Park's Park West Asset Management, Ken Griffin's Citadel Investment Group and Stephen DuBois's Camber Capital Management.
Due to the fact that Eagle Pharmaceuticals Inc (NASDAQ:EGRX) has faced falling interest from hedge fund managers, it's safe to say that there was a specific group of fund managers who sold off their positions entirely heading into Q3. At the top of the heap, Phill Gross and Robert Atchinson's Adage Capital Management dumped the biggest stake of the 700 funds watched by Insider Monkey, totaling an estimated $3.8 million in stock, and John Overdeck and David Siegel's Two Sigma Advisors was right behind this move, as the fund dropped about $0.5 million worth. These moves are interesting, as total hedge fund interest fell by 1 funds heading into Q3.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Eagle Pharmaceuticals Inc (NASDAQ:EGRX) but similarly valued. We will take a look at Encore Wire Corporation (NASDAQ:WIRE), Navigant Consulting, Inc. (NYSE:NCI), Nuveen New York AMT-Free Quality Municipal Income Fund (NYSE:NRK), and PC Connection, Inc. (NASDAQ:CNXN). This group of stocks' market valuations are closest to EGRX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WIRE,13,33120,-1 NCI,15,89666,0 NRK,2,2157,-2 CNXN,8,51481,1 Average,9.5,44106,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $250 million in EGRX's case. Navigant Consulting, Inc. (NYSE:NCI) is the most popular stock in this table. On the other hand Nuveen New York AMT-Free Quality Municipal Income Fund (NYSE:NRK) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Eagle Pharmaceuticals Inc (NASDAQ:EGRX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.