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Do you like to follow the buying trends of smart money investors? We ran a screen to find drug maker stocks currently in favor by hedge fund managers.

We began by screening the drug maker industry for stocks that have outperformed the market over the last quarter, with quarterly performance above 10%.

We then screened for those with bullish sentiment from institutional investors, with significant net institutional purchases over the last quarter representing at least 5% of share float. This indicates that institutional investors such as hedge fund managers and mutual fund managers expect these names to outperform into the future.

For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.

Do you think hedge funds are calling it right on these names? Use this list as a starting point for your own analysis.

1. Aegerion Pharmaceuticals, Inc. (AEGR): Engages in the development and commercialization of novel therapeutics to treat severe lipid disorders. Market cap at $648.98M, most recent closing price at $25.47. Net institutional purchases in the current quarter at 2.7M shares, which represents about 17.65% of the company's float of 15.30M shares. Performance over the last quarter at 83%. As of September 30th, 2012, the top 2 holders of the stock are FMR, LLC, and Advent International.

2. Hi-Tech Pharmacal Co. Inc. (HITK): Develops, manufactures, markets, and sells generic, prescription, over-the-counter (OTC), and nutritional products in liquid and semisolid dosage forms in the United States. Market cap at $461.86M, most recent closing price at $34.57. Net institutional purchases in the current quarter at 813.3K shares, which represents about 7.41% of the company's float of 10.97M shares. Performance over the last quarter at 12%. As of September 30th, 2012, the top 2 holders of the stock are FMR, LLC, and Royce & Associates.

3. Ligand Pharmaceuticals Incorporated (LGND): Operates as a biotechnology company. Market cap at $429.31M, most recent closing price at $21.53. Net institutional purchases in the current quarter at 1.6M shares, which represents about 11.58% of the company's float of 13.82M shares. Performance over the last quarter at 21%. As of September 30th, 2012, the top 2 holders of the stock are BVF, Inc., and Knott (David M.)

Source: Money Managers Are Buying These 3 Outperforming Drug Makers