As we already know from media reports and hedge fund investor letters, many hedge funds lost money in the third quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) in this article.
AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) was in 4 hedge funds’ portfolios at the end of September. AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) investors should be aware of an increase in activity from the world’s largest hedge funds recently. There were 2 hedge funds in our database with AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) 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 EnteroMedics Inc (NASDAQ:ETRM), Biodel Inc (NASDAQ:BIOD), and Rubicon Technology, Inc. (NASDAQ:RBCN) to gather more data points.
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If you’d ask most traders, hedge funds are viewed as worthless, old financial tools of yesteryear. While there are over 8000 funds in operation today, our experts hone in on the elite of this group, around 700 funds. These investment experts have their hands on the bulk of the smart money’s total capital, and by watching their best investments, Insider Monkey has spotted a number of investment strategies that have historically beaten Mr. Market. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Now, we’re going to take a look at the recent action surrounding AEterna Zentaris Inc. (USA) (NASDAQ:AEZS).
What have hedge funds been doing with AEterna Zentaris Inc. (USA) (NASDAQ:AEZS)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 100% from one quarter earlier. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies has the biggest position in AEterna Zentaris Inc. (USA) (NASDAQ:AEZS), worth close to $1 million, comprising less than 0.1% of its total 13F portfolio. On Renaissance Technologies’ heels is Sander Gerber of Hudson Bay Capital Management, with a $0.1 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish contain Ken Griffin’s Citadel Investment Group, and John Overdeck and David Siegel’s Two Sigma Advisors.
With a general bullishness amongst the heavyweights, specific money managers have jumped into AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) headfirst. Ken Griffin’s Citadel Investment Group initiated a $0.1 million position during the quarter. The only other fund with a brand new AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) position is Two Sigma Advisors.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) but similarly valued. We will take a look at EnteroMedics Inc (NASDAQ:ETRM), Biodel Inc (NASDAQ:BIOD), Rubicon Technology, Inc. (NASDAQ:RBCN), and Echelon Corporation (NASDAQ:ELON). This group of stocks’ market caps is closest to AEterna Zentaris Inc. (USA) (NASDAQ:AEZS)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ETRM | 5 | 809 | -1 |
| BIOD | 8 | 6239 | -1 |
| RBCN | 5 | 8457 | -2 |
| ELON | 4 | 3549 | -1 |
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 $5 million. That figure was $1 million in AEZS’s case. Biodel Inc (NASDAQ:BIOD) is on top of the popularity list with 8 hedge fund holdings, whereas Echelon Corporation (NASDAQ:ELON) is the least popular one with only 4 bullish hedge fund positions. AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) shares the same investor sentiment as that of Echelon Corporation (NASDAQ:ELON), with both having four hedge fund investors each. Considering that hedge funds aren’t fond of this stock in relation to other companies compared in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.
