U.S. Markets close in 1 hr 45 mins

Hedge Funds Are Warming Up To Alkermes Plc (ALKS)

Abigail Fisher

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Alkermes Plc (NASDAQ:ALKS).

Is Alkermes Plc (NASDAQ:ALKS) the right investment to pursue these days? Money managers are taking an optimistic view. The number of bullish hedge fund bets rose by 1 lately. Our calculations also showed that ALKS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). ALKS was in 24 hedge funds' portfolios at the end of September. There were 23 hedge funds in our database with ALKS positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

Today there are several tools stock market investors can use to value stocks. Two of the most under-the-radar tools are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the top hedge fund managers can outpace the broader indices by a significant amount (see the details here).

[caption id="attachment_261247" align="aligncenter" width="450"] Kevin Kotler of Broadfin Capital[/caption]

Broadfin Kevin Kotler

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a gander at the fresh hedge fund action regarding Alkermes Plc (NASDAQ:ALKS).

How have hedgies been trading Alkermes Plc (NASDAQ:ALKS)?

At Q3's end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in ALKS over the last 17 quarters. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

ALKS_dec2019

More specifically, Renaissance Technologies was the largest shareholder of Alkermes Plc (NASDAQ:ALKS), with a stake worth $95.6 million reported as of the end of September. Trailing Renaissance Technologies was Camber Capital Management, which amassed a stake valued at $68.3 million. Millennium Management, AQR Capital Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Camber Capital Management allocated the biggest weight to Alkermes Plc (NASDAQ:ALKS), around 3.59% of its portfolio. Broadfin Capital is also relatively very bullish on the stock, dishing out 0.9 percent of its 13F equity portfolio to ALKS.

As aggregate interest increased, key hedge funds have jumped into Alkermes Plc (NASDAQ:ALKS) headfirst. Alyeska Investment Group, managed by Anand Parekh, initiated the largest position in Alkermes Plc (NASDAQ:ALKS). Alyeska Investment Group had $19.3 million invested in the company at the end of the quarter. Kevin Kotler's Broadfin Capital also made a $4.9 million investment in the stock during the quarter. The other funds with brand new ALKS positions are Israel Englander's Millennium Management, Donald Sussman's Paloma Partners, and Paul Marshall and Ian Wace's Marshall Wace.

Let's now review hedge fund activity in other stocks similar to Alkermes Plc (NASDAQ:ALKS). These stocks are Lithia Motors Inc (NYSE:LAD), Grocery Outlet Holding Corp. (NASDAQ:GO), Mirati Therapeutics, Inc. (NASDAQ:MRTX), and Atlantic Union Bankshares Corporation (NASDAQ:AUB). This group of stocks' market values are closest to ALKS's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LAD,24,628887,3 GO,15,63095,-6 MRTX,33,1154565,6 AUB,3,19925,0 Average,18.75,466618,0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $467 million. That figure was $361 million in ALKS's case. Mirati Therapeutics, Inc. (NASDAQ:MRTX) is the most popular stock in this table. On the other hand Atlantic Union Bankshares Corporation (NASDAQ:AUB) is the least popular one with only 3 bullish hedge fund positions. Alkermes Plc (NASDAQ:ALKS) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on ALKS, though not to the same extent, as the stock returned 7.7% during the first two months of the fourth quarter and outperformed the market as well.

Disclosure: None. This article was originally published at Insider Monkey.

Related Content