Does Stanley Furniture Co. (NASDAQ:STLY) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund sentiment towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.
Stanley Furniture Co. (NASDAQ:STLY) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in four hedge funds’ portfolios at the end of September. 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 StemCells Inc (NASDAQ:STEM), Erickson Air-Crane Inc (NASDAQ:EAC), and 1347 Capital Corp (NASDAQ:TFSCU) to gather more data points.
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At the moment there are dozens of gauges investors put to use to appraise stocks. A duo of the less utilized gauges are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can outperform the S&P 500 by a healthy margin (see the details here).
Keeping this in mind, we’re going to take a peek at the new action encompassing Stanley Furniture Co. (NASDAQ:STLY).
How are hedge funds trading Stanley Furniture Co. (NASDAQ:STLY)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Among the funds that held shares of STLY at the end of September, Chuck Royce’s Royce & Associates reported the largest stake, valued at around $3.3 million. On the other hand, Jim Simons’ Renaissance Technologies and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners disclosed much smaller stakes, each worth about $200,000 million.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s now review hedge fund activity in other stocks similar to Stanley Furniture Co. (NASDAQ:STLY). These stocks are StemCells Inc (NASDAQ:STEM), Erickson Air-Crane Inc (NASDAQ:EAC), 1347 Capital Corp (NASDAQ:TFSCU), and Streamline Health Solutions Inc. (NASDAQ:STRM). All of these stocks’ market caps are similar to STLY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STEM | 5 | 1104 | 1 |
| EAC | 5 | 10007 | 1 |
| TFSCU | 4 | 9765 | 0 |
| STRM | 7 | 12193 | -1 |
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. Hedge funds held $12 million worth of STLY’s shares. Streamline Health Solutions Inc. (NASDAQ:STRM) is the most popular stock in this table. On the other hand, 1347 Capital Corp (NASDAQ:TFSCU) is the least popular one with only 4 bullish hedge fund positions, the same number as in STLY’s case. 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. However, we prefer to focus on stocks that attract more attention from hedge funds.
