Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the third quarter we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards ContraFect Corp (NASDAQ:CFRX) to find out whether it was one of their high conviction long-term ideas.
ContraFect Corp (NASDAQ:CFRX) was in 6 hedge funds’ portfolios at the end of September. ContraFect Corp (NASDAQ:CFRX) has seen an increase in hedge fund interest recently, which might come as a surprise, as the shares of the company declined 15.24% during the quarter. There were 5 hedge funds in our database with ContraFect Corp (NASDAQ:CFRX) positions at the end of the previous quarter. Let us find out more about hedge funds that hold a stake in the company.
At the end of this article, we will also compare ContraFect Corp (NASDAQ:CFRX) to other stocks, including Advent/Claymore Enhanced Growth & Income (NYSE:LCM), Ellington Residential Mortgage REIT (NYSE:EARN), and Protalix BioTherapeutics Inc. (NYSEMKT:PLX) to get a better sense of its popularity.
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In the eyes of most investors, hedge funds are viewed as unimportant, old financial vehicles of years past. While there are over 8000 funds in operation at the moment, our researchers look at the crème de la crème of this club, about 700 funds. Most estimates calculate that this group of people directs the majority of all hedge funds’ total capital, and by tracking their matchless picks, Insider Monkey has determined a few investment strategies that have historically exceeded the broader indices. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points per year for a decade in their back tests.
With all of this in mind, we’re going to take a gander at the recent action regarding ContraFect Corp (NASDAQ:CFRX).
What does the smart money think about ContraFect Corp (NASDAQ:CFRX)?
Heading into Q4, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 20% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Kevin Kotler’s Broadfin Capital has the number one position in ContraFect Corp (NASDAQ:CFRX), worth close to $6.3 million, corresponding to 0.4% of its total 13F portfolio. Sitting at the No. 2 spot is Matthew Strobeck of Birchview Capital, with a $2 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish comprise Bihua Chen’s Cormorant Asset Management, Adam Wright and Gary Kohler’s Blue Clay Capital, and Phill Gross and Robert Atchinson’s Adage Capital Management.
As one would reasonably expect, key money managers have jumped into ContraFect Corp (NASDAQ:CFRX) headfirst. Adage Capital Management created the biggest position in ContraFect Corp (NASDAQ:CFRX). Adage Capital Management had $0.2 million invested in the company at the end of the quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as ContraFect Corp (NASDAQ:CFRX) but similarly valued. We will take a look at Advent/Claymore Enhanced Growth & Income (NYSE:LCM), Ellington Residential Mortgage REIT (NYSE:EARN), Protalix BioTherapeutics Inc. (NYSEMKT:PLX), and Recro Pharma Inc (NASDAQ:REPH). This group of stocks’ market values match ContraFect Corp (NASDAQ:CFRX)’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LCM | 6 | 4660 | 4 |
| EARN | 4 | 5644 | -1 |
| PLX | 5 | 17251 | -2 |
| REPH | 7 | 42589 | 4 |
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 $18 million. That figure was $10 million in ContraFect Corp (NASDAQ:CFRX)’s case. Recro Pharma Inc (NASDAQ:REPH) is the most popular stock in this table. On the other hand, Ellington Residential Mortgage REIT (NYSE:EARN) is the least popular one with only 4 bullish hedge fund positions. ContraFect Corp (NASDAQ:CFRX) 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, Recro Pharma Inc (NASDAQ:REPH) might be a better candidate to consider a long position.
