Billionaire hedge fund managers such as David Abrams, Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Is Anika Therapeutics, Inc. (NASDAQ:ANIK) a buy right now? Prominent investors are becoming more confident. The number of bullish hedge fund positions increased by 1 lately. Our calculations also showed that ANIK isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s take a look at the recent hedge fund action encompassing Anika Therapeutics, Inc. (NASDAQ:ANIK).
How have hedgies been trading Anika Therapeutics, Inc. (NASDAQ:ANIK)?
At Q1’s end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in ANIK a year ago. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Anika Therapeutics, Inc. (NASDAQ:ANIK), with a stake worth $11.1 million reported as of the end of March. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $9.4 million. Millennium Management, Two Sigma Advisors, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, specific money managers were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most outsized position in Anika Therapeutics, Inc. (NASDAQ:ANIK). Arrowstreet Capital had $1.8 million invested in the company at the end of the quarter. Jeffrey Talpins’s Element Capital Management also initiated a $0.4 million position during the quarter. The only other fund with a brand new ANIK position is Mike Vranos’s Ellington.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Anika Therapeutics, Inc. (NASDAQ:ANIK) but similarly valued. We will take a look at GTY Technology Holdings, Inc. (NASDAQ:GTYH), Cowen Inc. (NASDAQ:COWN), Fluent, Inc. (NASDAQ:FLNT), and Computer Programs & Systems, Inc. (NASDAQ:CPSI). This group of stocks’ market caps resemble ANIK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GTYH | 9 | 13799 | -2 |
| COWN | 21 | 96363 | 4 |
| FLNT | 9 | 6703 | 4 |
| CPSI | 18 | 45626 | 5 |
| Average | 14.25 | 40623 | 2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $48 million in ANIK’s case. Cowen Inc. (NASDAQ:COWN) is the most popular stock in this table. On the other hand GTY Technology Holdings, Inc. (NASDAQ:GTYH) is the least popular one with only 9 bullish hedge fund positions. Anika Therapeutics, Inc. (NASDAQ:ANIK) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on ANIK as the stock returned 32.3% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
