Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track more than 700 prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' recent losses in Facebook. Let’s take a closer look at what the funds we track think about ADMA Biologics Inc (NASDAQ:ADMA) in this article.
ADMA Biologics Inc (NASDAQ:ADMA) shareholders have witnessed a decrease in enthusiasm from smart money of late. Our calculations also showed that ADMA isn't among the 30 most popular stocks among hedge funds.
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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let's check out the latest hedge fund action surrounding ADMA Biologics Inc (NASDAQ:ADMA).
How are hedge funds trading ADMA Biologics Inc (NASDAQ:ADMA)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from one quarter earlier. On the other hand, there were a total of 9 hedge funds with a bullish position in ADMA at the beginning of this year. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Perceptive Advisors was the largest shareholder of ADMA Biologics Inc (NASDAQ:ADMA), with a stake worth $40.5 million reported as of the end of September. Trailing Perceptive Advisors was Consonance Capital Management, which amassed a stake valued at $28.2 million. Broadfin Capital, Aisling Capital, and 683 Capital Partners were also very fond of the stock, giving the stock large weights in their portfolios.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 700+ hedge funds tracked by Insider Monkey identified ADMA as a viable investment and initiated a position in the stock.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as ADMA Biologics Inc (NASDAQ:ADMA) but similarly valued. We will take a look at CRH Medical Corporation (NYSE:CRHM), Rick's Cabaret Int'l, Inc (NASDAQ:RICK), Territorial Bancorp Inc (NASDAQ:TBNK), and WhiteHorse Finance, Inc. (NASDAQ:WHF). This group of stocks' market values are closest to ADMA's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CRHM,9,32563,3 RICK,7,28894,2 TBNK,5,23468,-1 WHF,2,995,0 Average,5.75,21480,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $130 million in ADMA's case. CRH Medical Corporation (NYSE:CRHM) is the most popular stock in this table. On the other hand WhiteHorse Finance, Inc. (NASDAQ:WHF) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks ADMA Biologics Inc (NASDAQ:ADMA) 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.