The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Avadel Pharmaceuticals plc (NASDAQ:AVDL).
Avadel Pharmaceuticals plc (NASDAQ:AVDL) investors should be aware of an increase in hedge fund interest recently. Our calculations also showed that AVDL isn't among the 30 most popular stocks among hedge funds (click for Q1 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 stock holders, hedge funds are seen as unimportant, old investment tools of the past. While there are more than 8000 funds trading today, We hone in on the leaders of this group, about 850 funds. It is estimated that this group of investors control the lion's share of all hedge funds' total asset base, and by watching their highest performing equity investments, Insider Monkey has figured out several investment strategies that have historically defeated Mr. Market. Insider Monkey's flagship short hedge fund strategy outpaced 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 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let's take a peek at the latest hedge fund action regarding Avadel Pharmaceuticals plc (NASDAQ:AVDL).
What have hedge funds been doing with Avadel Pharmaceuticals plc (NASDAQ:AVDL)?
Heading into the second quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 60% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AVDL over the last 18 quarters. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Among these funds, Avoro Capital Advisors (venBio Select Advisor) held the most valuable stake in Avadel Pharmaceuticals plc (NASDAQ:AVDL), which was worth $34.7 million at the end of the third quarter. On the second spot was Vivo Capital which amassed $28.4 million worth of shares. Acuta Capital Partners, Renaissance Technologies, and Ikarian Capital 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 Acuta Capital Partners allocated the biggest weight to Avadel Pharmaceuticals plc (NASDAQ:AVDL), around 10.15% of its 13F portfolio. Vivo Capital is also relatively very bullish on the stock, designating 2.57 percent of its 13F equity portfolio to AVDL.
As one would reasonably expect, key money managers have jumped into Avadel Pharmaceuticals plc (NASDAQ:AVDL) headfirst. Avoro Capital Advisors (venBio Select Advisor), managed by Behzad Aghazadeh, initiated the largest position in Avadel Pharmaceuticals plc (NASDAQ:AVDL). Avoro Capital Advisors (venBio Select Advisor) had $34.7 million invested in the company at the end of the quarter. Albert Cha and Frank Kung's Vivo Capital also made a $28.4 million investment in the stock during the quarter. The other funds with brand new AVDL positions are Manfred Yu's Acuta Capital Partners, Richard Driehaus's Driehaus Capital, and Ken Greenberg and David Kim's Ghost Tree Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Avadel Pharmaceuticals plc (NASDAQ:AVDL) but similarly valued. We will take a look at Barings BDC, Inc. (NYSE:BBDC), Peoples Utah Bancorp (NASDAQ:PUB), BioDelivery Sciences International, Inc. (NASDAQ:BDSI), and Extreme Networks, Inc (NASDAQ:EXTR). All of these stocks' market caps are similar to AVDL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BBDC,7,16743,-3 PUB,7,12970,1 BDSI,27,102794,2 EXTR,16,48943,-1 Average,14.25,45363,-0.25 [/table]
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $113 million in AVDL's case. BioDelivery Sciences International, Inc. (NASDAQ:BDSI) is the most popular stock in this table. On the other hand Barings BDC, Inc. (NYSE:BBDC) is the least popular one with only 7 bullish hedge fund positions. Avadel Pharmaceuticals plc (NASDAQ:AVDL) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately AVDL wasn't nearly as popular as these 10 stocks and hedge funds that were betting on AVDL were disappointed as the stock returned 5.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
