Hedge Funds Are Buying These 4 Biotech Stocks on Winning Streaks

Last Friday, the Supreme Court delivered a ruling in "Association for Molecular Pathology vs Myriad Genetics that bans patents on naturally occurring human genes while permitting the patenting of synthesized DNA. The ACLU and others tout the court’s decision as a positive development for the biotech industry that will spur innovation by freeing genes up for widespread usage. In fact, according to CNN Money, Myriad Genetics’ stock rose by an initial 13% following the Thursday ruling, which seemed to confirm that the news from Washington was actually good.

However, the stock’s price fell 5.6% to $32.01 by the end of the day. U.S. Today writes that investors are increasingly paying attention to the fact that Myriad Genetics faces more competition within its industry as a result of the decision. The company’s shares have continued to fall since last Thursday, resulting in a closing price of $25.88 on Wednesday.

Investing Ideas

As investors continue to watch the decline of Myriad Genetics’ stock, we decided to look for biotech stocks that have the support of investors. We began with a universe of U.S. biotech stocks, which we subsequently screened for stocks with significant net institutional purchases comprising 5% or more of share float over the current quarter. When institutional investors such as hedge fund and mutual fund managers make these purchases, it indicates that they are confident in the stock’s ability to outperform into the future.  

For our second step, we looked for stocks with strong performances that back up the bullish sentiment. We searched for stocks on winning streaks, which means that they have been outperforming the S&P 500. Winning streaks are measured by a persistence of days in which the stock outperformed the S&P 500 and little persistence of days in underperforming the index. To determine this ratio, we divided the longest winning streaks (in days) by the longest losing streak over the last month.

We were left with four stocks on our list.

The List

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Do you think these stocks are well positioned to extend their winning streaks? Use this list as a starting point for your own analysis.

 

 

1. Basic Energy Services, Inc. (IMMU, Earnings, Analysts, Financials): Engages in the research, development, manufacture, and marketing of monoclonal, antibody-based products for the treatment of cancer, autoimmune, and other serious diseases in the United States and Europe.

Market cap at $346.41M, most recent closing price at $4.43.

Net institutional purchases in the current quarter at 4.4M shares, which represents about 5.73% of the company's float of 76.82M shares.

The stock's average daily alpha vs. the S&P500 index stands at 2.35% (measured close to close, over the last month). During this period, the longest winning streak lasted 9 days (i.e. the stock's daily returns outperformed the S&P 500 for 9 consecutive days). The longest losing streak lasted 2 days (i.e. a win streak / losing streak ratio of 4.5).

2. Celldex Therapeutics, Inc. (CLDX, Earnings, Analysts, Financials): Engages in the development, manufacture, and commercialization of targeted immunotherapies that prevent or treat specific forms of cancer, autoimmune disorders, and diseases caused by infectious organisms.

Market cap at $1.13B, most recent closing price at $15.20.

Net institutional purchases in the current quarter at 18.5M shares, which represents about 22.94% of the company's float of 80.65M shares.

The stock's average daily alpha vs. the S&P500 index stands at 1.18% (measured close to close, over the last month). During this period, the longest winning streak lasted 7 days (i.e. the stock's daily returns outperformed the S&P 500 for 7 consecutive days). The longest losing streak lasted 2 days (i.e. a win streak / losing streak ratio of 3.5).

 

3. ACADIA Pharmaceuticals, Inc. (ACAD, Earnings, Analysts, Financials): Focuses on drug discovery and clinical development of novel treatments for central nervous system disorders.

Market cap at $1.42B, most recent closing price at $18.09.

Net institutional purchases in the current quarter at 6.4M shares, which represents about 12.97% of the company's float of 49.34M shares.

The stock's average daily alpha vs. the S&P500 index stands at 1.79% (measured close to close, over the last month). During this period, the longest winning streak lasted 7 days (i.e. the stock's daily returns outperformed the S&P 500 for 7 consecutive days). The longest losing streak lasted 2 days (i.e. a win streak / losing streak ratio of 3.5).

4. Alnylam Pharmaceuticals, Inc. (ALNY, Earnings, Analysts, Financials): Focuses on the discovery, development, and commercialization of novel therapeutics based on RNA interference (RNAi).

Market cap at $1.79B, most recent closing price at $30.25.

Net institutional purchases in the current quarter at 10.8M shares, which represents about 20.57% of the company's float of 52.51M shares.

The stock's average daily alpha vs. the S&P500 index stands at 1.09% (measured close to close, over the last month). During this period, the longest winning streak lasted 9 days (i.e. the stock's daily returns outperformed the S&P 500 for 9 consecutive days). The longest losing streak lasted 2 days (i.e. a win streak / losing streak ratio of 4.5).

 

(List compiled by Mary-Lynn Cesar. Institutional data sourced from Fidelity. Price data sourced from Yahoo! Finance. All other data sourced from Finviz.)

 

Use Kapitall's Tools: Looking for ways to analyze this list?Use this article snapshot as a launch pad: Simply click on the links, and use Kapitall's tab navigation to browse through the data...

 

Analyze These Ideas: Getting Started

Read descriptions for all companies mentioned Access a performance overview for all stocks in the list Compare analyst ratings for the companies mentioned Compare analyst ratings to annual returns for stocks mentioned Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)

Dig Deeper: Access Company Snapshots, Charts, Filings

Basic Energy Services, Inc. (IMMU, Chart, Download SEC Filings) Celldex Therapeutics, Inc. (CLDX, Chart, Download SEC Filings) ACADIA Pharmaceuticals, Inc. (ACAD, Chart, Download SEC Filings) Alnylam Pharmaceuticals, Inc. (ALNY, Chart, Download SEC Filings)

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