Do Hedge Funds Love Travere Therapeutics, Inc. (TVTX)?

·6 min read

In this article we will check out the progression of hedge fund sentiment towards Travere Therapeutics, Inc. (NASDAQ:TVTX) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Travere Therapeutics, Inc. (NASDAQ:TVTX) has experienced a decrease in support from the world's most elite money managers in recent months. Travere Therapeutics, Inc. (NASDAQ:TVTX) was in 25 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 27. There were 27 hedge funds in our database with TVTX holdings at the end of March. Our calculations also showed that TVTX isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

To most traders, hedge funds are assumed to be slow, old financial vehicles of years past. While there are over 8000 funds trading at the moment, Our experts hone in on the masters of this club, around 850 funds. It is estimated that this group of investors watch over bulk of the smart money's total capital, and by monitoring their finest picks, Insider Monkey has spotted various investment strategies that have historically exceeded the S&P 500 index. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Michael Castor Sio Capital
Michael Castor Sio Capital

Michael Castor of Sio Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we're going to take a peek at the key hedge fund action surrounding Travere Therapeutics, Inc. (NASDAQ:TVTX).

Do Hedge Funds Think TVTX Is A Good Stock To Buy Now?

At Q2's end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the previous quarter. On the other hand, there were a total of 26 hedge funds with a bullish position in TVTX a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

More specifically, Armistice Capital was the largest shareholder of Travere Therapeutics, Inc. (NASDAQ:TVTX), with a stake worth $83.9 million reported as of the end of June. Trailing Armistice Capital was RA Capital Management, which amassed a stake valued at $81.9 million. Adage Capital Management, Perceptive Advisors, and Renaissance Technologies were 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 Great Point Partners allocated the biggest weight to Travere Therapeutics, Inc. (NASDAQ:TVTX), around 3.32% of its 13F portfolio. Armistice Capital is also relatively very bullish on the stock, setting aside 1.5 percent of its 13F equity portfolio to TVTX.

Since Travere Therapeutics, Inc. (NASDAQ:TVTX) has faced falling interest from the smart money, it's safe to say that there exists a select few hedgies that elected to cut their entire stakes in the second quarter. At the top of the heap, Steve Cohen's Point72 Asset Management cut the largest position of all the hedgies monitored by Insider Monkey, worth an estimated $40.2 million in stock. Behzad Aghazadeh's fund, Avoro Capital Advisors (venBio Select Advisor), also cut its stock, about $31.2 million worth. These moves are interesting, as total hedge fund interest fell by 2 funds in the second quarter.

Let's now review hedge fund activity in other stocks similar to Travere Therapeutics, Inc. (NASDAQ:TVTX). We will take a look at HealthStream, Inc. (NASDAQ:HSTM), Global Partners LP (NYSE:GLP), OneSpaWorld Holdings Limited (NASDAQ:OSW), Forrester Research, Inc. (NASDAQ:FORR), Byline Bancorp, Inc. (NYSE:BY), Gracell Biotechnologies Inc. (NASDAQ:GRCL), and Cutera, Inc. (NASDAQ:CUTR). All of these stocks' market caps are similar to TVTX's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HSTM,14,67764,0 GLP,2,9146,0 OSW,12,155686,1 FORR,8,112838,1 BY,13,38653,5 GRCL,9,143202,-6 CUTR,22,277523,6 Average,11.4,114973,1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.4 hedge funds with bullish positions and the average amount invested in these stocks was $115 million. That figure was $352 million in TVTX's case. Cutera, Inc. (NASDAQ:CUTR) is the most popular stock in this table. On the other hand Global Partners LP (NYSE:GLP) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Travere Therapeutics, Inc. (NASDAQ:TVTX) is more popular among hedge funds. Our overall hedge fund sentiment score for TVTX is 80.8. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 24% in 2021 through October 22nd but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on TVTX as the stock returned 80.1% since the end of June (through 10/22) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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