The elite funds run by legendary investors such as David Tepper and Dan Loeb make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don't follow. Because of their pay structures, they have strong incentives to do the research necessary to beat the market. That's why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Intra-Cellular Therapies Inc (NASDAQ:ITCI) from the perspective of those elite funds.
Is Intra-Cellular Therapies Inc (NASDAQ:ITCI) worth your attention right now? The smart money is in a bearish mood. The number of bullish hedge fund positions dropped by 1 lately. Our calculations also showed that ITCI isn't among the 30 most popular stocks among hedge funds. ITCI was in 15 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 16 hedge funds in our database with ITCI holdings at the end of the previous quarter.
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 market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to go over the recent hedge fund action surrounding Intra-Cellular Therapies Inc (NASDAQ:ITCI).
How are hedge funds trading Intra-Cellular Therapies Inc (NASDAQ:ITCI)?
At the end of the fourth quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in ITCI a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Intra-Cellular Therapies Inc (NASDAQ:ITCI) was held by Samlyn Capital, which reported holding $14.4 million worth of stock at the end of December. It was followed by Citadel Investment Group with a $11.9 million position. Other investors bullish on the company included Millennium Management, Columbus Circle Investors, and Point72 Asset Management.
Because Intra-Cellular Therapies Inc (NASDAQ:ITCI) has faced declining sentiment from the smart money, logic holds that there were a few hedge funds that elected to cut their full holdings in the third quarter. It's worth mentioning that Dmitry Balyasny's Balyasny Asset Management dropped the biggest position of the 700 funds followed by Insider Monkey, valued at about $11 million in stock. Stanley Druckenmiller's fund, Duquesne Capital, also said goodbye to its stock, about $6.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 1 funds in the third quarter.
Let's go over hedge fund activity in other stocks similar to Intra-Cellular Therapies Inc (NASDAQ:ITCI). We will take a look at istar Inc (NYSE:STAR), Nexgen Energy Ltd. (NYSE:NXE), Accelerate Diagnostics Inc (NASDAQ:AXDX), and Winmark Corporation (NASDAQ:WINA). This group of stocks' market values match ITCI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position STAR,8,68468,0 NXE,7,8432,1 AXDX,5,31482,-1 WINA,8,85756,1 Average,7,48535,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $49 million. That figure was $58 million in ITCI's case. istar Inc (NYSE:STAR) is the most popular stock in this table. On the other hand Accelerate Diagnostics Inc (NASDAQ:AXDX) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Intra-Cellular Therapies Inc (NASDAQ:ITCI) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately ITCI wasn't nearly as popular as these 15 stock and hedge funds that were betting on ITCI were disappointed as the stock returned 11.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.