Cepheid (CPHD) Not Doing Enough to Attract Smart Money

Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third most popular stock, lost 10% amid uncertainty regarding the interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Is Cepheid (NASDAQ:CPHD) undervalued? Prominent investors are reducing their bets on the stock. The number of long hedge fund bets retreated by 1 recently. CPHD was in 16 hedge funds’ portfolios at the end of September. There were 17 hedge funds in our database with CPHD holdings at the end of the second 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 IDACORP Inc (NYSE:IDA), Apple Hospitality REIT Inc (NYSE:APLE), and Post Holdings Inc (NYSE:POST) to gather more data points.

In the eyes of most investors, hedge funds are viewed as underperforming, outdated investment tools of years past. While there are more than 8,000 funds trading at the moment, we look at the moguls of this group, around 700 funds. It is estimated that this group of investors shepherd most of the smart money’s total capital, and by following their first-class investments, Insider Monkey has brought to light numerous investment strategies that have historically surpassed Mr. Market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

With all of this in mind, let’s review the new action encompassing Cepheid (NASDAQ:CPHD).

Hedge fund activity in Cepheid (NASDAQ:CPHD)

Heading into Q4, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 6% dip from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully (or had already accumulated large positions).

Of the funds tracked by Insider Monkey, Alyeska Investment Group, managed by Anand Parekh, holds the number one position in Cepheid (NASDAQ:CPHD). Alyeska Investment Group has a $53.3 million position in the stock, comprising 0.7% of its 13F portfolio. The second-largest stake is held by Israel Englander of Millennium Management, with a $51.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism consist of Clifford Fox’s Columbus Circle Investors, Paul Sinclair’s Blue Jay Capital Management, and Mario Gabelli’s GAMCO Investors.