Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow over 700 of the best-performing investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is IRIDEX Corporation (NASDAQ:IRIX), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
IRIDEX Corporation (NASDAQ:IRIX) was in 4 hedge funds’ portfolios at the end of September. IRIX investors should pay attention to an increase in enthusiasm from smart money in recent months. There were 2 hedge funds in our database with IRIX 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 Approach Resources Inc. (NASDAQ:AREX), First South Bancorp, Inc. (NASDAQ:FSBK), and Magnum Hunter Resources Corp (NYSE:MHR) to gather more data points.
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In today’s marketplace there are dozens of metrics shareholders use to size up stocks. A pair of the most under-the-radar metrics are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outpace the S&P 500 by a superb amount (see the details here).
Keeping this in mind, we’re going to take a look at the new action regarding IRIDEX Corporation (NASDAQ:IRIX).
How are hedge funds trading IRIDEX Corporation (NASDAQ:IRIX)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from one quarter earlier. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies holds the biggest position in IRIDEX Corporation (NASDAQ:IRIX). Renaissance Technologies has a $1.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Manatuck Hill Partners, led by Mark Broach, holding a $0.6 million position; 0.3% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish comprise Craig A. Drill’s Craig Drill Capital and Chao Ku’s Nine Chapters Capital Management.
With a general bullishness amongst the heavyweights, key money managers have jumped into IRIDEX Corporation (NASDAQ:IRIX) headfirst. Craig Drill Capital established the most valuable position in IRIDEX Corporation (NASDAQ:IRIX). Craig Drill Capital had $0.4 million invested in the company at the end of the quarter. Chao Ku’s Nine Chapters Capital Management also made a $0.1 million investment in the stock during the quarter.
Let’s go over hedge fund activity in other stocks similar to IRIDEX Corporation (NASDAQ:IRIX). These stocks are Approach Resources Inc. (NASDAQ:AREX), First South Bancorp, Inc. (NASDAQ:FSBK), Magnum Hunter Resources Corp (NYSE:MHR), and Key Technology, Inc. (NASDAQ:KTEC). This group of stocks’ market valuations match IRIX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AREX | 4 | 7014 | -4 |
| FSBK | 4 | 5963 | 0 |
| MHR | 12 | 7652 | 2 |
| KTEC | 4 | 13774 | 0 |
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 $9 million. That figure was just $3 million in IRIX’s case. Magnum Hunter Resources Corp (NYSE:MHR) is the most popular stock in this table. On the other hand Approach Resources Inc. (NASDAQ:AREX) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks IRIDEX Corporation (NASDAQ:IRIX) is even less popular than AREX. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed 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.