Hedge Funds Are Buying Endocyte, Inc. (ECYT)

World-class money managers like Bill Ackman and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.

Is Endocyte, Inc. (NASDAQ:ECYT) a buy, sell, or hold? Investors who are in the know are taking a bullish view. The number of long hedge fund positions moved up by 3 lately. ECYT was in 10 hedge funds’ portfolios at the end of the third quarter of 2015. There were 7 hedge funds in our database with ECYT holdings 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 Genocea Biosciences Inc (NASDAQ:GNCA), Limelight Networks, Inc. (NASDAQ:LLNW), and The Phoenix Companies, Inc. (NYSE:PNX) to gather more data points.

In the 21st century investor’s toolkit there are dozens of formulas stock traders employ to analyze publicly traded companies. A couple of the most innovative formulas are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can outpace their index-focused peers by a solid margin (see the details here).

With all of this in mind, let’s take a peek at the latest action encompassing Endocyte, Inc. (NASDAQ:ECYT).

What does the smart money think about Endocyte, Inc. (NASDAQ:ECYT)?

At the Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 43% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Baker Bros. Advisors, managed by Julian Baker and Felix Baker, holds the most valuable position in Endocyte, Inc. (NASDAQ:ECYT). Baker Bros. Advisors has an $6.2 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Millennium Management, managed by Israel Englander, which holds an $3.9 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish consist of James Dondero’s Highland Capital Management, D. E. Shaw’s D E Shaw, and Jim Simons’ Renaissance Technologies.

Now, key money managers have been driving this bullishness. Baker Bros. Advisors, managed by Julian Baker and Felix Baker, established the largest position in Endocyte, Inc. (NASDAQ:ECYT). Baker Bros. Advisors had $6.2 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also made an $0.3 million investment in the stock during the quarter. The following funds were also among the new ECYT investors: Peter Muller’s PDT Partners and Hal Mintz’s Sabby Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Endocyte, Inc. (NASDAQ:ECYT). We will take a look at Genocea Biosciences Inc (NASDAQ:GNCA), Limelight Networks, Inc. (NASDAQ:LLNW), The Phoenix Companies, Inc. (NYSE:PNX), and Transenterix Inc (NYSEMKT:TRXC). This group of stocks’ market values are similar to ECYT’s market value.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $29 million, compared to $15 million in ECYT’s case. Genocea Biosciences Inc (NASDAQ:GNCA) is the most popular stock in this table. On the other hand The Phoenix Companies, Inc. (NYSE:PNX) is the least popular one with only 5 bullish hedge fund positions. Endocyte, Inc. (NASDAQ:ECYT) registers an average level of interest from hedge funds, which is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard GNCA might be a better candidate to consider a long position.