Is CytRx Corporation (NASDAQ:CYTR) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.
CytRx Corporation (NASDAQ:CYTR) has experienced an increase in hedge fund interest of late. At the end of this article we will also compare CYTR to other stocks, including Skullcandy Inc (NASDAQ:SKUL), GulfMark Offshore, Inc. (NYSE:GLF), and ROI Acquisition Corp (NASDAQ:ROIQ) to get a better sense of its popularity.
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If you’d ask most investors, hedge funds are viewed as slow, outdated investment tools of the past. While there are over 8000 funds with their doors open at the moment, We look at the top tier of this club, approximately 700 funds. These money managers have their hands on the majority of the smart money’s total asset base, and by shadowing their inimitable picks, Insider Monkey has spotted a few investment strategies that have historically surpassed the market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Keeping this in mind, let’s take a peek at the fresh action surrounding CytRx Corporation (NASDAQ:CYTR).
How are hedge funds trading CytRx Corporation (NASDAQ:CYTR)?
At the Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 40% from one quarter earlier. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, QVT Financial, managed by Daniel Gold, holds the number one position in CytRx Corporation (NASDAQ:CYTR). QVT Financial has a $13 million position in the stock, comprising 0.4% of its 13F portfolio. The second largest stake is held by James A. Silverman of Opaleye Management, with a $3.6 million position; the fund has 1.8% of its 13F portfolio invested in the stock. The remaining members of the smart money that are bullish comprise Julian Baker and Felix Baker’s Baker Bros. Advisors and Nathan Fischel’s DAFNA Capital Management.
As industrywide interest jumped, some big names were breaking ground themselves. Opaleye Management initiated the biggest position in CytRx Corporation (NASDAQ:CYTR). Hal Mintz’s Sabby Capital also made a $0.4 million investment in the stock during the quarter. The only other fund with a new position in the stock is Israel Englander’s Millennium Management.
Let’s also examine hedge fund activity in other stocks similar to CytRx Corporation (NASDAQ:CYTR). These stocks are Skullcandy Inc (NASDAQ:SKUL), GulfMark Offshore, Inc. (NYSE:GLF), ROI Acquisition Corp (NASDAQ:ROIQ), and Salem Communications Corp (NASDAQ:SALM). This group of stocks’ market values are similar to CYTR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SKUL | 13 | 15614 | -1 |
| GLF | 9 | 35125 | -3 |
| ROIQ | 13 | 35401 | 0 |
| SALM | 6 | 10142 | 0 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $22 million in CYTR’s case. Skullcandy Inc (NASDAQ:SKUL) is the most popular stock in this table, while Salem Communications Corp (NASDAQ:SALM) is the least popular one with only 6 bullish hedge fund positions. CytRx Corporation (NASDAQ:CYTR) 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 SKUL might be a better candidate to consider a long position.
