Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is La Jolla Pharmaceutical Company (NASDAQ:LJPC), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
La Jolla Pharmaceutical Company (NASDAQ:LJPC) was in 6 hedge funds' portfolios at the end of September. The all time high for this statistics is 21. LJPC investors should be aware of a decrease in enthusiasm from smart money recently. There were 8 hedge funds in our database with LJPC holdings at the end of June. Our calculations also showed that LJPC 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most market participants, hedge funds are perceived as worthless, outdated financial vehicles of the past. While there are more than 8000 funds trading at present, Our experts hone in on the leaders of this group, about 850 funds. It is estimated that this group of investors command the lion's share of the smart money's total asset base, and by observing their top stock picks, Insider Monkey has determined various investment strategies that have historically outstripped the S&P 500 index. Insider Monkey's flagship short hedge fund strategy beat 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 .
David Siegel of Two Sigma Advisors
David Siegel of Two Sigma Advisors
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 15 best blue chip stocks 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. Keeping this in mind we're going to take a glance at the recent hedge fund action encompassing La Jolla Pharmaceutical Company (NASDAQ:LJPC).
What have hedge funds been doing with La Jolla Pharmaceutical Company (NASDAQ:LJPC)?
At Q3's end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in LJPC a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Tang Capital Management, managed by Kevin C. Tang, holds the largest position in La Jolla Pharmaceutical Company (NASDAQ:LJPC). Tang Capital Management has a $37.9 million position in the stock, comprising 6.9% of its 13F portfolio. The second largest stake is held by Alyeska Investment Group, managed by Anand Parekh, which holds a $2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers with similar optimism consist of John Overdeck and David Siegel's Two Sigma Advisors, D. E. Shaw's D E Shaw and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Tang Capital Management allocated the biggest weight to La Jolla Pharmaceutical Company (NASDAQ:LJPC), around 6.86% of its 13F portfolio. Alyeska Investment Group is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to LJPC.
Seeing as La Jolla Pharmaceutical Company (NASDAQ:LJPC) has faced bearish sentiment from hedge fund managers, we can see that there exists a select few money managers that slashed their full holdings heading into Q4. At the top of the heap, Greg Eisner's Engineers Gate Manager said goodbye to the largest stake of the "upper crust" of funds tracked by Insider Monkey, worth about $0.2 million in stock, and Cliff Asness's AQR Capital Management was right behind this move, as the fund cut about $0.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 2 funds heading into Q4.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as La Jolla Pharmaceutical Company (NASDAQ:LJPC) but similarly valued. We will take a look at Willis Lease Finance Corporation (NASDAQ:WLFC), Ambow Education Holding Ltd. (NYSE:AMBO), Aclaris Therapeutics, Inc. (NASDAQ:ACRS), Tonix Pharmaceuticals Holding Corp. (NASDAQ:TNXP), Pro-Dex, Inc. (NASDAQ:PDEX), X4 Pharmaceuticals, Inc. (NASDAQ:XFOR), and Kura Sushi USA, Inc. (NASDAQ:KRUS). All of these stocks' market caps are closest to LJPC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WLFC,3,72776,1 AMBO,1,384,0 ACRS,16,45519,-2 TNXP,2,135,1 PDEX,3,1841,1 XFOR,8,23452,-2 KRUS,5,17140,1 Average,5.4,23035,0 [/table]
As you can see these stocks had an average of 5.4 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $42 million in LJPC's case. Aclaris Therapeutics, Inc. (NASDAQ:ACRS) is the most popular stock in this table. On the other hand Ambow Education Holding Ltd. (NYSE:AMBO) is the least popular one with only 1 bullish hedge fund positions. La Jolla Pharmaceutical Company (NASDAQ:LJPC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LJPC is 28.2. 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. 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 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on LJPC as the stock returned 17.4% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
