Hedge Funds Are Selling Sequenom, Inc. (SQNM)

It was a rough third quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 7% during the quarter. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by about 14 percentage points between June 25 and October 30, as investors fled less-known quantities for safe havens. This was the case with hedge funds, who we heard were pulling money from the market amid the volatility, which included money from small-cap stocks, which they invest in at a higher rate than other investors. This action contributed to the greater decline in these stocks during the tumultuous period. We will study how this market volatility affected their sentiment towards Sequenom, Inc. (NASDAQ:SQNM) during the quarter below.

Sequenom, Inc. (NASDAQ:SQNM) was in 11 hedge funds’ portfolios at the end of September. Sequenom, Inc. (NASDAQ:SQNM) has experienced a decrease in enthusiasm from the smart money of late. There were 13 hedge funds in our database with Sequenom, Inc. (NASDAQ:SQNM) positions at the end of the previous quarter. At the end of this article, we will also compare Sequenom, Inc. (NASDAQ:SQNM) to other stocks, including Charter Financial Corp (NASDAQ:CHFN), Hennessy Capital Acquisition Corp (NASDAQ:BLBD), and Tribune Publishing Co (NYSE:TPUB) to get a better sense of its popularity.

Today, there is a multitude of signals that stock market investors employ to appraise their stock investments. A pair of the best signals are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the best money managers can outclass their index-focused peers by a solid margin (see the details here).

Keeping this in mind, let’s go over the key action regarding Sequenom, Inc. (NASDAQ:SQNM).

How are hedge funds trading Sequenom, Inc. (NASDAQ:SQNM)?

Heading into Q4, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 15% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Camber Capital Management, managed by Stephen DuBois, holds the largest position in Sequenom, Inc. (NASDAQ:SQNM). Camber Capital Management has a $20.6 million position in the stock, comprising 1.8% of its 13F portfolio. The second largest stake is held by Palo Alto Investors, led by William Leland Edwards, holding a $17.5 million position; 0.8% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions encompass George McCabe’s Portolan Capital Management, Paul Orlin and Alex Porter’s Amici Capital and Cliff Asness’ AQR Capital Management.

Since Sequenom, Inc. (NASDAQ:SQNM) has experienced a decline in interest from the smart money, it’s easy to see that there was a specific group of fund managers who sold off their entire stakes last quarter. At the top of the heap, Howard Marks’ Oaktree Capital Management dropped the largest position of all the hedgies tracked by Insider Monkey, comprising about $3.9 million in stock, and Renaissance Technologies was right behind this move, as the fund dumped about $1.2 million worth of shares. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Sequenom, Inc. (NASDAQ:SQNM) but similarly valued. These stocks are Charter Financial Corp (NASDAQ:CHFN), Hennessy Capital Acquisition Corp (NASDAQ:BLBD), Tribune Publishing Co (NYSE:TPUB), and Peregrine Pharmaceuticals (NASDAQ:PPHM). All of these stocks’ market caps match Sequenom, Inc. (NASDAQ:SQNM)’s market cap.

As you can see, these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $48 million in Sequenom, Inc. (NASDAQ:SQNM)’s case. Tribune Publishing Co (NYSE:TPUB) is the most popular stock in this table, in terms of the number of hedge fund holdings, whereas Hennessy Capital Acquisition Corp (NASDAQ:BLBD) is the least popular one, with only 7 bullish hedge fund positions. Compared to these stocks, Sequenom, Inc. (NASDAQ:SQNM) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.