Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of ANI Pharmaceuticals Inc (NASDAQ:ANIP).
Is ANI Pharmaceuticals (ANIP) a good stock to buy now? ANIP shareholders have witnessed a decrease in enthusiasm from smart money in recent months. ANI Pharmaceuticals Inc (NASDAQ:ANIP) was in 8 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 17. There were 10 hedge funds in our database with ANIP holdings at the end of June. Our calculations also showed that ANIP 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.
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 66 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Noam Gottesman of GLG 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 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. With all of this in mind we're going to view the latest hedge fund action encompassing ANI Pharmaceuticals Inc (NASDAQ:ANIP).
What have hedge funds been doing with ANI Pharmaceuticals Inc (NASDAQ:ANIP)?
At third quarter's end, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ANIP over the last 21 quarters. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
The largest stake in ANI Pharmaceuticals Inc (NASDAQ:ANIP) was held by Renaissance Technologies, which reported holding $4 million worth of stock at the end of September. It was followed by GLG Partners with a $2.3 million position. Other investors bullish on the company included Two Sigma Advisors, Birch Grove Capital, and AQR Capital Management. In terms of the portfolio weights assigned to each position Birch Grove Capital allocated the biggest weight to ANI Pharmaceuticals Inc (NASDAQ:ANIP), around 0.78% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to ANIP.
Because ANI Pharmaceuticals Inc (NASDAQ:ANIP) has experienced falling interest from hedge fund managers, logic holds that there exists a select few fund managers who sold off their positions entirely in the third quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital said goodbye to the largest investment of the "upper crust" of funds followed by Insider Monkey, worth close to $1.2 million in stock. Paul Tudor Jones's fund, Tudor Investment Corp, also dropped its stock, about $0.2 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 2 funds in the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to ANI Pharmaceuticals Inc (NASDAQ:ANIP). We will take a look at Hemisphere Media Group Inc (NASDAQ:HMTV), Luxfer Holdings PLC (NYSE:LXFR), International General Insurance Holdings Ltd. (NASDAQ:IGIC), Comtech Telecommunications Corp. (NASDAQ:CMTL), Cadiz Inc (NASDAQ:CDZI), Experience Investment Corp. (NASDAQ:EXPC), and Orchid Island Capital, Inc. (NYSE:ORC). This group of stocks' market caps match ANIP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HMTV,6,24902,-2 LXFR,12,71054,1 IGIC,9,11712,0 CMTL,12,36285,-1 CDZI,7,5833,-2 EXPC,19,95338,6 ORC,4,11068,0 Average,9.9,36599,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.9 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $12 million in ANIP's case. Experience Investment Corp. (NASDAQ:EXPC) is the most popular stock in this table. On the other hand Orchid Island Capital, Inc. (NYSE:ORC) is the least popular one with only 4 bullish hedge fund positions. ANI Pharmaceuticals Inc (NASDAQ:ANIP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ANIP is 30.5. 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 31.6% in 2020 through December 2nd and surpassed the market again by 16 percentage points. Unfortunately ANIP wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ANIP investors were disappointed as the stock returned 0.4% since the end of September (through 12/2) 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.