We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on December 31st. We at Insider Monkey have made an extensive database of more than 835 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Intra-Cellular Therapies Inc (NASDAQ:ITCI) based on those filings.
Intra-Cellular Therapies Inc (NASDAQ:ITCI) has experienced an increase in activity from the world's largest hedge funds lately. ITCI was in 12 hedge funds' portfolios at the end of December. There were 11 hedge funds in our database with ITCI holdings at the end of the previous quarter. Our calculations also showed that ITCI isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In the 21st century investor’s toolkit there are several formulas shareholders employ to appraise publicly traded companies. A pair of the best formulas are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the elite hedge fund managers can outpace the market by a very impressive margin (see the details here).
[caption id="attachment_758402" align="aligncenter" width="400"] William Leland Edwards of Palo Alto Investors[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. Now we're going to analyze the key hedge fund action surrounding Intra-Cellular Therapies Inc (NASDAQ:ITCI).
How have hedgies been trading Intra-Cellular Therapies Inc (NASDAQ:ITCI)?
At Q4's end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in ITCI a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Consonance Capital Management held the most valuable stake in Intra-Cellular Therapies Inc (NASDAQ:ITCI), which was worth $67.8 million at the end of the third quarter. On the second spot was Perceptive Advisors which amassed $28.6 million worth of shares. Citadel Investment Group, Citadel Investment Group, and Opaleye Management 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 Consonance Capital Management allocated the biggest weight to Intra-Cellular Therapies Inc (NASDAQ:ITCI), around 4.14% of its 13F portfolio. Opaleye Management is also relatively very bullish on the stock, dishing out 2.74 percent of its 13F equity portfolio to ITCI.
Consequently, specific money managers have jumped into Intra-Cellular Therapies Inc (NASDAQ:ITCI) headfirst. LMR Partners, managed by Ben Levine, Andrew Manuel and Stefan Renold, created the biggest position in Intra-Cellular Therapies Inc (NASDAQ:ITCI). LMR Partners had $3.4 million invested in the company at the end of the quarter. William Leland Edwards's Palo Alto Investors also made a $1.3 million investment in the stock during the quarter. The only other fund with a brand new ITCI position is Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Intra-Cellular Therapies Inc (NASDAQ:ITCI) but similarly valued. We will take a look at Mueller Water Products, Inc. (NYSE:MWA), Pacira Pharmaceuticals Inc (NASDAQ:PCRX), Badger Meter, Inc. (NYSE:BMI), and Vicor Corp (NASDAQ:VICR). All of these stocks' market caps are similar to ITCI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MWA,20,276558,-3 PCRX,28,408153,-3 BMI,20,178333,2 VICR,12,38689,0 Average,20,225433,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $225 million. That figure was $136 million in ITCI's case. Pacira Pharmaceuticals Inc (NASDAQ:PCRX) is the most popular stock in this table. On the other hand Vicor Corp (NASDAQ:VICR) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Intra-Cellular Therapies Inc (NASDAQ:ITCI) is even less popular than VICR. Hedge funds dodged a bullet by taking a bearish stance towards ITCI. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but managed to beat the market by 4.2 percentage points. Unfortunately ITCI wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ITCI investors were disappointed as the stock returned -54.9% during the same time period 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 most of these stocks already outperformed the market so far in 2020. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.