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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Amphastar Pharmaceuticals Inc (NASDAQ:AMPH).
Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 9 hedge funds' portfolios at the end of the third quarter of 2019. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as SpringWorks Therapeutics, Inc. (NASDAQ:SWTX), Sirius International Insurance Group, Ltd. (NASDAQ:SG), and Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) to gather more data points. Our calculations also showed that AMPH isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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Paul Marshall of Marshall Wace[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to review the recent hedge fund action encompassing Amphastar Pharmaceuticals Inc (NASDAQ:AMPH).
How have hedgies been trading Amphastar Pharmaceuticals Inc (NASDAQ:AMPH)?
Heading into the fourth quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2019. On the other hand, there were a total of 5 hedge funds with a bullish position in AMPH a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) was held by Renaissance Technologies, which reported holding $14.5 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $9 million position. Other investors bullish on the company included Marshall Wace, Citadel Investment Group, and Millennium Management. In terms of the portfolio weights assigned to each position Marshall Wace allocated the biggest weight to Amphastar Pharmaceuticals Inc (NASDAQ:AMPH), around 0.06% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to AMPH.
Seeing as Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) has experienced a decline in interest from the smart money, it's safe to say that there is a sect of money managers that decided to sell off their entire stakes heading into Q4. Interestingly, Steve Cohen's Point72 Asset Management dumped the biggest position of the "upper crust" of funds monitored by Insider Monkey, worth about $3.4 million in stock. Benjamin A. Smith's fund, Laurion Capital Management, also said goodbye to its stock, about $0.3 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) but similarly valued. These stocks are SpringWorks Therapeutics, Inc. (NASDAQ:SWTX), Sirius International Insurance Group, Ltd. (NASDAQ:SG), Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI), and ATN International, Inc. (NASDAQ:ATNI). This group of stocks' market valuations are similar to AMPH's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SWTX,11,382035,11 SG,3,2416,2 SPPI,7,32036,-2 ATNI,9,65615,0 Average,7.5,120526,2.75 [/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 $121 million. That figure was $37 million in AMPH's case. SpringWorks Therapeutics, Inc. (NASDAQ:SWTX) is the most popular stock in this table. On the other hand Sirius International Insurance Group, Ltd. (NASDAQ:SG) is the least popular one with only 3 bullish hedge fund positions. Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately AMPH wasn't nearly as popular as these 20 stocks and hedge funds that were betting on AMPH were disappointed as the stock returned -1.6% during the fourth quarter (through the end of November) 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.