Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
BioDelivery Sciences International, Inc. (NASDAQ:BDSI) shareholders have witnessed a decrease in enthusiasm from smart money lately. BDSI was in 11 hedge funds’ portfolios at the end of the third quarter of 2016. There were 14 hedge funds in our database with BDSI holdings at the end of the previous quarter. At the end of this article we will also compare BDSI to other stocks including Xunlei Ltd (NASDAQ:XNET), KVH Industries, Inc. (NASDAQ:KVHI), and Genocea Biosciences Inc (NASDAQ:GNCA) to get a better sense of its popularity.
Follow Biodelivery Sciences International Inc (NASDAQ:BDSI)
Follow Biodelivery Sciences International Inc (NASDAQ:BDSI)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
wavebreakmedia/Shutterstock.com
How have hedgies been trading BioDelivery Sciences International, Inc. (NASDAQ:BDSI)?
Heading into the fourth quarter of 2016, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a 21% drop from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in BDSI heading into this year, showing an even larger drop in 2016. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Kevin Kotler’s Broadfin Capital has the biggest position in BioDelivery Sciences International, Inc. (NASDAQ:BDSI), worth close to $14 million, corresponding to 1.3% of its total 13F portfolio. The second most bullish fund manager is Glenn W. Welling of Engaged Capital, with a $5.1 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish encompass Chuck Royce’s Royce & Associates, Renaissance Technologies, one of the biggest hedge funds in the world, and Israel Englander’s Millennium Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-micro-cap stocks.
Seeing as BioDelivery Sciences International, Inc. (NASDAQ:BDSI) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of money managers who were dropping their positions entirely heading into Q4. At the top of the heap, Steven Boyd’s Armistice Capital cashed in the largest stake of all the hedgies followed by Insider Monkey, valued at about $6.3 million in stock, and Benjamin A. Smith’s Laurion Capital Management was right behind this move, as the fund said goodbye to about $0.3 million worth of shares.
Let’s now take a look at hedge fund activity in other stocks similar to BioDelivery Sciences International, Inc. (NASDAQ:BDSI). We will take a look at Xunlei Ltd (NASDAQ:XNET), KVH Industries, Inc. (NASDAQ:KVHI), Genocea Biosciences Inc (NASDAQ:GNCA), and Genie Energy Ltd (NYSE:GNE). This group of stocks’ market valuations are closest to BDSI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| XNET | 7 | 5696 | -2 |
| KVHI | 6 | 16875 | 0 |
| GNCA | 6 | 8042 | -2 |
| GNE | 5 | 5897 | -2 |
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $35 million in BDSI’s case. Xunlei Ltd (NASDAQ:XNET) is the most popular stock in this table. On the other hand Genie Energy Ltd (NYSE:GNE) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks BioDelivery Sciences International, Inc. (NASDAQ:BDSI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers and are more overweight the stock, it may be a good idea to analyze it in detail and potentially include it in your portfolio. However, the continued decline in ownership is cause for concern.
Disclosure: None
