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Is Lipocine Inc (LPCN) Going To Burn These Hedge Funds ?

Nina Todic

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Lipocine Inc (NASDAQ:LPCN).

Is Lipocine Inc (NASDAQ:LPCN) a buy right now? Money managers are turning bullish. The number of bullish hedge fund bets improved by 1 lately. Our calculations also showed that LPCN isn't among the 30 most popular stocks among hedge funds. LPCN was in 3 hedge funds' portfolios at the end of September. There were 2 hedge funds in our database with LPCN holdings at the end of the previous quarter.

In the 21st century investor’s toolkit there are plenty of formulas investors put to use to appraise stocks. Two of the less utilized formulas are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the elite investment managers can trounce their index-focused peers by a significant amount (see the details here).

[caption id="attachment_27676" align="aligncenter" width="355"] Israel Englander of Millennium Management[/caption]

MILLENNIUM MANAGEMENT

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 new hedge fund action regarding Lipocine Inc (NASDAQ:LPCN).

Hedge fund activity in Lipocine Inc (NASDAQ:LPCN)

At Q3's end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LPCN over the last 17 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

No of Hedge Funds with LPCN Positions

The largest stake in Lipocine Inc (NASDAQ:LPCN) was held by Renaissance Technologies, which reported holding $1.7 million worth of stock at the end of September. It was followed by Knoll Capital Management with a $0.1 million position. The only other hedge fund that is bullish on the company was Millennium Management.

As one would reasonably expect, key hedge funds have been driving this bullishness. Millennium Management, managed by Israel Englander, created the biggest position in Lipocine Inc (NASDAQ:LPCN). Millennium Management had $0.1 million invested in the company at the end of the quarter.

Let's now take a look at hedge fund activity in other stocks similar to Lipocine Inc (NASDAQ:LPCN). We will take a look at ESSA Pharma Inc. (NASDAQ:EPIX), Endologix, Inc. (NASDAQ:ELGX), Agile Therapeutics Inc (NASDAQ:AGRX), and Navios Maritime Containers L.P. (NASDAQ:NMCI). This group of stocks' market values are similar to LPCN's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EPIX,3,17229,2 ELGX,5,4860,-3 AGRX,10,21190,5 NMCI,3,11248,0 Average,5.25,13632,1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $2 million in LPCN's case. Agile Therapeutics Inc (NASDAQ:AGRX) is the most popular stock in this table. On the other hand ESSA Pharma Inc. (NASDAQ:EPIX) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Lipocine Inc (NASDAQ:LPCN) is even less popular than EPIX. Hedge funds dodged a bullet by taking a bearish stance towards LPCN. Our calculations showed that the top 20 most popular hedge fund stocks returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately LPCN wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); LPCN investors were disappointed as the stock returned -86% during the fourth quarter (through 11/22) 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 70 percent of these stocks already outperformed the market so far in Q4.

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

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