Cascade Microtech, Inc. (CSCD): Are Hedge Funds Right About This Stock?

Is Cascade Microtech, Inc. (NASDAQ:CSCD) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They fail miserably sometimes, but historically their consensus stock picks outperformed the market after adjusting for known risk factors.

Is Cascade Microtech, Inc. (NASDAQ:CSCD) going to take off soon? Prominent investors are taking a bearish view. The number of bullish hedge fund positions went down by 2 recently. CSCD was in 5 hedge funds’ portfolios at the end of September. There were 7 hedge funds in our database with CSCD positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Franklin Financial Network Inc (NYSE:FSB), DURECT Corporation (NASDAQ:DRRX), and Bluerock Residential Growth REIT Inc (NYSEMKT:BRG) to gather more data points.

If you’d ask most stock holders, hedge funds are seen as underperforming, outdated investment vehicles of years past. While there are over an 8000 funds with their doors open today, We choose to focus on the aristocrats of this group, about 700 funds. These money managers oversee bulk of all hedge funds’ total asset base, and by monitoring their first-class investments, Insider Monkey has uncovered various investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Keeping this in mind, we’re going to check out the latest action surrounding Cascade Microtech, Inc. (NASDAQ:CSCD).

Hedge fund activity in Cascade Microtech, Inc. (NASDAQ:CSCD)

At the Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from one quarter earlier. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the biggest position in Cascade Microtech, Inc. (NASDAQ:CSCD). Royce & Associates has a $13.8 million position in the stock, comprising 0.1% of its 13F portfolio. On Royce & Associates’s heels is Renaissance Technologies, holding a $10.7 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism include John Overdeck and David Siegel’s Two Sigma Advisors, Israel Englander’s Millennium Management and Peter Muller’s PDT Partners.

Because Cascade Microtech, Inc. (NASDAQ:CSCD) has witnessed a drop in interest from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of hedge funds who sold off their positions entirely heading into Q4. At the top of the heap, Matthew Drapkin and Steven R. Becker’s Becker Drapkin Management dropped the biggest position of the 700 funds tracked by Insider Monkey, comprising an estimated $7 million in stock. Robert G. Moses’ fund, RGM Capital, also sold off its stock, about $6.9 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 2 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to Cascade Microtech, Inc. (NASDAQ:CSCD). We will take a look at Franklin Financial Network Inc (NYSE:FSB), DURECT Corporation (NASDAQ:DRRX), Bluerock Residential Growth REIT Inc (NYSEMKT:BRG), and Flexsteel Industries, Inc. (NASDAQ:FLXS). This group of stocks’ market caps resemble CSCD’s market cap.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was also $25 million in CSCD’s case. Bluerock Residential Growth REIT Inc (NYSEMKT:BRG) is the most popular stock in this table, while Franklin Financial Network Inc (NYSE:FSB) is the least popular one with only 4 bullish hedge fund positions. Cascade Microtech, Inc. (NASDAQ:CSCD) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BRG might be a better candidate to consider a long position.