Harvard Bioscience, Inc. (HBIO): Are Hedge Funds Right About This Stock?

At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

Is Harvard Bioscience, Inc. (NASDAQ:HBIO) a buy here? Prominent investors are surely reducing their bets on the stock. The number of long hedge fund positions fell by 1 lately. There were 6 hedge funds in our database with HBIO holdings at the end of the 2016 third quarter. At the end of this article we will also compare HBIO to other stocks including Xcel Brands Inc (NASDAQ:XELB), FBR & Co (NASDAQ:FBRC), and Catalyst Pharmaceutical Partners, Inc. (NASDAQ:CPRX) 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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With all of this in mind, we’re going to review the new action regarding Harvard Bioscience, Inc. (NASDAQ:HBIO).

What have hedge funds been doing with Harvard Bioscience, Inc. (NASDAQ:HBIO)?

At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 14% from one quarter earlier. On the other hand, there were a total of 7 hedge funds with a bullish position in HBIO at the beginning of this year. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Royce & Associates, led by Chuck Royce, holds the biggest position in Harvard Bioscience, Inc. (NASDAQ:HBIO). According to regulatory filings, the fund has a $4.5 million position in the stock, comprising less than 0.1% of its 13F portfolio. On Royce & Associates’s heels is Renaissance Technologies, one of the biggest hedge funds in the world, holding a $1.4 million position; less than 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors with similar optimism include D. E. Shaw’s D E Shaw, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors 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.

Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that dropped their entire stakes in the stock during the third quarter. It’s worth mentioning that Benjamin A. Smith’s Laurion Capital Management dropped the biggest stake of all the investors monitored by Insider Monkey, totaling an estimated $0.3 million in stock. Ben Levine, Andrew Manuel and Stefan Renold’s fund, LMR Partners, also dropped its stock, about $0.1 million worth.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Harvard Bioscience, Inc. (NASDAQ:HBIO) but similarly valued. We will take a look at Xcel Brands Inc (NASDAQ:XELB), FBR & Co (NASDAQ:FBRC), Catalyst Pharmaceutical Partners, Inc. (NASDAQ:CPRX), and Perion Network Ltd (NASDAQ:PERI). This group of stocks’ market values are similar to HBIO’s market value.

As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $6 million in HBIO’s case. FBR & Co (NASDAQ:FBRC) is the most popular stock in this table. On the other hand Xcel Brands Inc (NASDAQ:XELB) is the least popular one with only 3 bullish hedge fund positions. Harvard Bioscience, Inc. (NASDAQ:HBIO) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FBRC might be a better candidate to consider taking a long position in.

Disclosure: none.