Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and investors' positions as of the end of the fourth quarter. You can find write-ups about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) based on that data.
Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) was in 17 hedge funds' portfolios at the end of the fourth quarter of 2018. SPPI investors should be aware of a decrease in hedge fund interest lately. There were 23 hedge funds in our database with SPPI positions at the end of the previous quarter. Our calculations also showed that SPPI isn't among the 30 most popular stocks among hedge funds.
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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We're going to take a look at the latest hedge fund action surrounding Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI).
How are hedge funds trading Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI)?
At the end of the fourth quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -26% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in SPPI 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.
Among these funds, Consonance Capital Management held the most valuable stake in Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI), which was worth $26 million at the end of the fourth quarter. On the second spot was OrbiMed Advisors which amassed $19.8 million worth of shares. Moreover, Armistice Capital, Renaissance Technologies, and Point72 Asset Management were also bullish on Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there is a sect of hedge funds that elected to cut their positions entirely last quarter. Intriguingly, Ken Griffin's Citadel Investment Group cut the biggest position of all the hedgies monitored by Insider Monkey, comprising close to $12.3 million in stock, and Bihua Chen's Cormorant Asset Management was right behind this move, as the fund said goodbye to about $8.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds last quarter.
Let's also examine hedge fund activity in other stocks similar to Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI). These stocks are Atkore International Group Inc. (NYSE:ATKR), Retrophin Inc (NASDAQ:RTRX), Sturm, Ruger & Company (NYSE:RGR), and Boise Cascade Co (NYSE:BCC). This group of stocks' market values match SPPI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATKR,17,90206,-7 RTRX,22,373738,0 RGR,14,85987,0 BCC,15,42385,-7 Average,17,148079,-3.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $148 million. That figure was $83 million in SPPI's case. Retrophin Inc (NASDAQ:RTRX) is the most popular stock in this table. On the other hand Sturm, Ruger & Company (NYSE:RGR) is the least popular one with only 14 bullish hedge fund positions. Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 SPPI wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); SPPI investors were disappointed as the stock returned 7.5% 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.