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The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Supernus Pharmaceuticals Inc (NASDAQ:SUPN) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is Supernus Pharmaceuticals Inc (NASDAQ:SUPN) an exceptional stock to buy now? Investors who are in the know were becoming less confident. The number of long hedge fund positions were cut by 4 in recent months. Supernus Pharmaceuticals Inc (NASDAQ:SUPN) was in 19 hedge funds' portfolios at the end of June. The all time high for this statistics is 25. Our calculations also showed that SUPN isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 23 hedge funds in our database with SUPN holdings at the end of March.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (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 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Donald Sussman of Paloma Partners
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Now we're going to take a look at the fresh hedge fund action encompassing Supernus Pharmaceuticals Inc (NASDAQ:SUPN).
Hedge fund activity in Supernus Pharmaceuticals Inc (NASDAQ:SUPN)
At the end of the second quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SUPN over the last 20 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Steven Boyd's Armistice Capital has the most valuable position in Supernus Pharmaceuticals Inc (NASDAQ:SUPN), worth close to $52.4 million, comprising 2.3% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, holding a $37.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers that hold long positions contain Brian Ashford-Russell and Tim Woolley's Polar Capital, Paul Marshall and Ian Wace's Marshall Wace LLP and John Overdeck and David Siegel's Two Sigma Advisors. In terms of the portfolio weights assigned to each position Armistice Capital allocated the biggest weight to Supernus Pharmaceuticals Inc (NASDAQ:SUPN), around 2.3% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, setting aside 0.63 percent of its 13F equity portfolio to SUPN.
Because Supernus Pharmaceuticals Inc (NASDAQ:SUPN) has witnessed bearish sentiment from hedge fund managers, we can see that there lies a certain "tier" of hedge funds that elected to cut their entire stakes last quarter. Interestingly, Ken Griffin's Citadel Investment Group dumped the largest position of all the hedgies tracked by Insider Monkey, totaling about $12.8 million in stock. Steve Cohen's fund, Point72 Asset Management, also dropped its stock, about $6.2 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 4 funds last quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Supernus Pharmaceuticals Inc (NASDAQ:SUPN) but similarly valued. We will take a look at Cardiovascular Systems Inc (NASDAQ:CSII), Shutterstock Inc (NYSE:SSTK), La-Z-Boy Incorporated (NYSE:LZB), Passage Bio, Inc. (NASDAQ:PASG), PDC Energy Inc (NASDAQ:PDCE), Office Depot Inc (NYSE:ODP), and Coeur Mining, Inc. (NYSE:CDE). All of these stocks' market caps are closest to SUPN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CSII,20,132861,8 SSTK,16,88271,3 LZB,21,51265,0 PASG,13,474820,-4 PDCE,23,210307,-2 ODP,18,107793,1 CDE,14,48945,0 Average,17.9,159180,0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.9 hedge funds with bullish positions and the average amount invested in these stocks was $159 million. That figure was $151 million in SUPN's case. PDC Energy Inc (NASDAQ:PDCE) is the most popular stock in this table. On the other hand Passage Bio, Inc. (NASDAQ:PASG) is the least popular one with only 13 bullish hedge fund positions. Supernus Pharmaceuticals Inc (NASDAQ:SUPN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SUPN is 53.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately SUPN wasn't nearly as popular as these 10 stocks and hedge funds that were betting on SUPN were disappointed as the stock returned -12.3% in Q3 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.