Hedge Funds Are Dumping Cowen Group, Inc. (COWN)

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors endured a torrid quarter, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Cowen Group, Inc. (NASDAQ:COWN).

Cowen Group, Inc. (NASDAQ:COWN) was in 16 hedge funds’ portfolios at the end of the third quarter of 2015. COWN has experienced a decrease in support from the world’s most elite money managers recently. There were 20 hedge funds in our database with COWN 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 Tower International Inc (NYSE:TOWR), Sagent Pharmaceuticals Inc (NASDAQ:SGNT), and The Spectranetics Corporation (NASDAQ:SPNC) to gather more data points.

Today there are a large number of metrics stock traders can use to grade stocks. A couple of the most useful metrics are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can outclass the broader indices by a superb margin (see the details here).

Now, let’s take a look at the fresh action encompassing Cowen Group, Inc. (NASDAQ:COWN).

How are hedge funds trading Cowen Group, Inc. (NASDAQ:COWN)?

At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 20% from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Debra Fine’s Fine Capital Partners has the number one position in Cowen Group, Inc. (NASDAQ:COWN), worth close to $38.7 million, corresponding to 3.8% of its total 13F portfolio. Coming in second is Royce & Associates, managed by Chuck Royce, which holds a $10.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism consist of D. E. Shaw’s D E Shaw, Anton Schutz’s Mendon Capital Advisors and Ken Fisher’s Fisher Asset Management.

Judging by the fact that Cowen Group, Inc. (NASDAQ:COWN) has experienced bearish sentiment from the smart money, we can see that there were a few funds that decided to sell off their positions entirely heading into Q4. It’s worth mentioning that Peter Muller’s PDT Partners sold off the largest position of the 700 funds watched by Insider Monkey, valued at an estimated $0.8 million in stock, and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners was right behind this move, as the fund dropped about $0.2 million worth of Cowen shares. These bearish behaviors are important to note, as total hedge fund interest fell by 4 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Cowen Group, Inc. (NASDAQ:COWN) but similarly valued. These stocks are Tower International Inc (NYSE:TOWR), Sagent Pharmaceuticals Inc (NASDAQ:SGNT), The Spectranetics Corporation (NASDAQ:SPNC), and Kansas City Life Insurance Co (NASDAQ:KCLI). This group of stocks’ market valuations are closest to COWN’s market valuation.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. COWN managed to attract more of the hedgies’ money than any of its peers: $106 million at the end of September. The Spectranetics Corporation (NASDAQ:SPNC) is the most popular stock in this table, while Kansas City Life Insurance Co (NASDAQ:KCLI) is the least popular one with only 4 bullish hedge fund positions. Cowen Group, Inc. (NASDAQ:COWN) 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 SPNC might be a better candidate to consider a long position.