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Where Do Hedge Funds Stand On Cumberland Pharmaceuticals, Inc. (CPIX)?

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Debasis Saha
·6 min read
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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX).

Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds' portfolios at the end of September. Our calculations also showed that CPIX isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare CPIX to other stocks including Trinity Biotech plc (NASDAQ:TRIB), Neovasc Inc. (NASDAQ:NVCN), and Universal Stainless & Alloy Products (NASDAQ:USAP) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

To most shareholders, hedge funds are seen as worthless, outdated investment tools of years past. While there are over 8000 funds trading at present, We choose to focus on the masters of this group, about 850 funds. These hedge fund managers control the majority of all hedge funds' total asset base, and by paying attention to their matchless stock picks, Insider Monkey has formulated several investment strategies that have historically defeated the market. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Tim Lynch of Stonepine Capital
Tim Lynch of Stonepine Capital

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 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. Now let's take a look at the new hedge fund action regarding Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX).

What have hedge funds been doing with Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX)?

At third quarter's end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CPIX over the last 21 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is CPIX A Good Stock To Buy?
Is CPIX A Good Stock To Buy?

More specifically, Ariel Investments was the largest shareholder of Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX), with a stake worth $2.5 million reported as of the end of September. Trailing Ariel Investments was Renaissance Technologies, which amassed a stake valued at $1.9 million. Stonepine Capital was 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 Stonepine Capital allocated the biggest weight to Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX), around 1.97% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, dishing out 0.04 percent of its 13F equity portfolio to CPIX.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX) but similarly valued. We will take a look at Trinity Biotech plc (NASDAQ:TRIB), Neovasc Inc. (NASDAQ:NVCN), Universal Stainless & Alloy Products (NASDAQ:USAP), Broadwind Energy Inc. (NASDAQ:BWEN), IZEA Inc. (NASDAQ:IZEA), AmeriServ Financial, Inc. (NASDAQ:ASRV), and Gulf Island Fabrication, Inc. (NASDAQ:GIFI). This group of stocks' market caps are similar to CPIX's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TRIB,3,3526,-2 NVCN,5,4806,1 USAP,7,9992,1 BWEN,7,5334,3 IZEA,1,22,0 ASRV,3,4529,0 GIFI,6,6449,-1 Average,4.6,4951,0.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.6 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $6 million in CPIX's case. Universal Stainless & Alloy Products (NASDAQ:USAP) is the most popular stock in this table. On the other hand IZEA Inc. (NASDAQ:IZEA) is the least popular one with only 1 bullish hedge fund positions. Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CPIX is 39.7. 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 negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and surpassed the market again by 15.4 percentage points. Unfortunately CPIX wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CPIX investors were disappointed as the stock returned -7.8% since the end of September (through 11/23) 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 in 2020.

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

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