With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Adamas Pharmaceuticals Inc (NASDAQ:ADMS).
Is ADMS a good stock to buy now? Money managers were becoming more confident. The number of bullish hedge fund bets rose by 1 in recent months. Adamas Pharmaceuticals Inc (NASDAQ:ADMS) was in 12 hedge funds' portfolios at the end of September. The all time high for this statistics is 20. Our calculations also showed that ADMS 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). There were 11 hedge funds in our database with ADMS positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.
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 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 let's take a gander at the key hedge fund action encompassing Adamas Pharmaceuticals Inc (NASDAQ:ADMS).
Do Hedge Funds Think ADMS Is A Good Stock To Buy Now?
At Q3's end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in ADMS a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Is ADMS A Good Stock To Buy?
The largest stake in Adamas Pharmaceuticals Inc (NASDAQ:ADMS) was held by Armistice Capital, which reported holding $11.3 million worth of stock at the end of September. It was followed by Opaleye Management with a $6.1 million position. Other investors bullish on the company included Renaissance Technologies, Stonepine Capital, and D E Shaw. In terms of the portfolio weights assigned to each position Stonepine Capital allocated the biggest weight to Adamas Pharmaceuticals Inc (NASDAQ:ADMS), around 2.82% of its 13F portfolio. Healthcare Value Capital is also relatively very bullish on the stock, setting aside 1.36 percent of its 13F equity portfolio to ADMS.
As industrywide interest jumped, specific money managers were breaking ground themselves. Healthcare Value Capital, managed by Joe Riccardo, assembled the most valuable position in Adamas Pharmaceuticals Inc (NASDAQ:ADMS). Healthcare Value Capital had $0.4 million invested in the company at the end of the quarter. Greg Eisner's Engineers Gate Manager also made a $0.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Muller's PDT Partners and Ken Griffin's Citadel Investment Group.
Let's now review hedge fund activity in other stocks similar to Adamas Pharmaceuticals Inc (NASDAQ:ADMS). These stocks are Remark Holdings, Inc. (NASDAQ:MARK), Innovative Solutions & Support Inc (NASDAQ:ISSC), Permian Basin Royalty Trust (NYSE:PBT), Envela Corporation (NYSE:ELA), Erytech Pharma S.A. (NASDAQ:ERYP), CONSOL Energy Inc. (NYSE:CEIX), and Civeo Corporation (NYSE:CVEO). All of these stocks' market caps resemble ADMS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MARK,3,1343,-2 ISSC,5,5403,2 PBT,3,1010,-1 ELA,1,1782,-1 ERYP,2,4002,0 CEIX,10,10430,-3 CVEO,12,42395,-2 Average,5.1,9481,-1 [/table]
As you can see these stocks had an average of 5.1 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $28 million in ADMS's case. Civeo Corporation (NYSE:CVEO) is the most popular stock in this table. On the other hand Envela Corporation (NYSE:ELA) is the least popular one with only 1 bullish hedge fund positions. Adamas Pharmaceuticals Inc (NASDAQ:ADMS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ADMS is 74. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on ADMS as the stock returned 20.1% since the end of Q3 (through 12/8) 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.
