Do Hedge Funds Love Intevac, Inc. (IVAC)?

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

Hedge fund interest in Intevac, Inc. (NASDAQ:IVAC) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare IVAC to other stocks including Luby’s, Inc. (NYSE:LUB), Civeo Corporation (Canada) (NYSE:CVEO), and Dicerna Pharmaceuticals Inc (NASDAQ:DRNA) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Now, we’re going to take a gander at the recent action regarding Intevac, Inc. (NASDAQ:IVAC).

How are hedge funds trading Intevac, Inc. (NASDAQ:IVAC)?

At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards IVAC over the last 5 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Royce & Associates, led by Chuck Royce, holds the biggest position in Intevac, Inc. (NASDAQ:IVAC). According to regulatory filings, the fund has a $12.5 million position in the stock, comprising 0.1% of its 13F portfolio. On Royce & Associates’s heels is Becker Drapkin Management, led by Matthew Drapkin and Steven R. Becker, holding a $5.9 million position; 14% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism include Renaissance Technologies, one of the biggest hedge funds in the world, Matthew Hulsizer’s PEAK6 Capital Management and Israel Englander’s Millennium Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: First Eagle Investment Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Millennium Management).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Intevac, Inc. (NASDAQ:IVAC) but similarly valued. These stocks are Luby’s, Inc. (NYSE:LUB), Civeo Corporation (Canada) (NYSE:CVEO), Dicerna Pharmaceuticals Inc (NASDAQ:DRNA), and Assembly Biosciences Inc (NASDAQ:ASMB). This group of stocks’ market caps resemble IVAC’s market cap.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $20 million in IVAC’s case. Civeo Corporation (Canada) (NYSE:CVEO) is the most popular stock in this table. On the other hand Luby’s, Inc. (NYSE:LUB) is the least popular one with only 4 bullish hedge fund positions. Intevac, Inc. (NASDAQ:IVAC) 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 CVEO might be a better candidate to consider taking a long position in.

Disclosure: none.