Hedge Funds Are Dumping Cytori Therapeutics Inc. (USA) (CYTX)

Cytori Therapeutics Inc. (USA) (NASDAQ:CYTX) has experienced a decrease in support from the world’s most elite money managers in recent months.

In the eyes of most stock holders, hedge funds are perceived as underperforming, old financial tools of the past. While there are more than 8000 funds trading at present, we at Insider Monkey look at the elite of this group, around 450 funds. It is widely believed that this group oversees the majority of all hedge funds’ total capital, and by paying attention to their highest performing stock picks, we have uncovered a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as important, positive insider trading sentiment is a second way to parse down the world of equities. Just as you’d expect, there are a number of reasons for a corporate insider to downsize shares of his or her company, but only one, very obvious reason why they would buy. Many academic studies have demonstrated the useful potential of this method if you know what to do (learn more here).

Keeping this in mind, it’s important to take a gander at the key action surrounding Cytori Therapeutics Inc. (USA) (NASDAQ:CYTX).

How have hedgies been trading Cytori Therapeutics Inc. (USA) (NASDAQ:CYTX)?

Heading into Q2, a total of 5 of the hedge funds we track were bullish in this stock, a change of -38% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes meaningfully.

When looking at the hedgies we track, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the largest position in Cytori Therapeutics Inc. (USA) (NASDAQ:CYTX). Adage Capital Management has a $0.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Israel Englander of Millennium Management, with a $0.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedge funds that are bullish include Ken Griffin’s Citadel Investment Group, John Burbank’s Passport Capital and Sander Gerber’s Hudson Bay Capital Management.

Since Cytori Therapeutics Inc. (USA) (NASDAQ:CYTX) has faced declining sentiment from the smart money, logic holds that there exists a select few money managers that decided to sell off their entire stakes last quarter. It’s worth mentioning that Peter Kolchinsky’s RA Capital Management cut the largest investment of the “upper crust” of funds we key on, valued at about $5.9 million in stock.. Cliff Asness’s fund, AQR Capital Management, also cut its stock, about $0.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 3 funds last quarter.

Insider trading activity in Cytori Therapeutics Inc. (USA) (NASDAQ:CYTX)

Insider buying is at its handiest when the company we’re looking at has experienced transactions within the past half-year. Over the latest six-month time frame, Cytori Therapeutics Inc. (USA) (NASDAQ:CYTX) has experienced 3 unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Cytori Therapeutics Inc. (USA) (NASDAQ:CYTX). These stocks are Durata Therapeutics Inc (NASDAQ:DRTX), Enzon Pharmaceuticals, Inc. (NASDAQ:ENZN), OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI), ShangPharma Corp (ADR) (NYSE:SHP), and Cempra Inc (NASDAQ:CEMP). This group of stocks are in the biotechnology industry and their market caps are similar to CYTX’s market cap.

With the returns exhibited by our studies, everyday investors must always monitor hedge fund and insider trading sentiment, and Cytori Therapeutics Inc. (USA) (NASDAQ:CYTX) applies perfectly to this mantra.

Click here to learn why you should track hedge funds