Senomyx Inc. (NASDAQ:SNMX) investors should be aware of a decrease in activity from the world’s largest hedge funds recently.
If you’d ask most traders, hedge funds are perceived as slow, outdated financial vehicles of the past. While there are over 8000 funds trading today, we at Insider Monkey choose to focus on the upper echelon of this group, about 450 funds. Most estimates calculate that this group controls the majority of the hedge fund industry’s total capital, and by keeping an eye on their best investments, we have uncovered a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 24 percentage points in 7 months (see the details here).
Just as key, bullish insider trading activity is another way to parse down the investments you’re interested in. There are a number of stimuli for a bullish insider to downsize shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several empirical studies have demonstrated the useful potential of this tactic if investors understand where to look (learn more here).
Now, let’s take a gander at the latest action surrounding Senomyx Inc. (NASDAQ:SNMX).
What does the smart money think about Senomyx Inc. (NASDAQ:SNMX)?
In preparation for this year, a total of 8 of the hedge funds we track were long in this stock, a change of 0% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially.
When looking at the hedgies we track, Peter Kolchinsky’s RA Capital Management had the biggest position in Senomyx Inc. (NASDAQ:SNMX), worth close to $6.7 million, accounting for 2.4% of its total 13F portfolio. Sitting at the No. 2 spot is Prescott Group Capital Management, managed by Phil Frohlich, which held a $2.5 million position; 0.7% of its 13F portfolio is allocated to the stock. Other peers that are bullish include Kerr Neilson’s Platinum Asset Management, Jim Simons’s Renaissance Technologies and Gregory Fraser, Rudolph Kluiber, and Timothy Kroch’s GRT Capital Partners.
Because Senomyx Inc. (NASDAQ:SNMX) has experienced a declination in interest from the aggregate hedge fund industry, we can see that there is a sect of fund managers that slashed their positions entirely last quarter. It’s worth mentioning that Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners dumped the largest investment of the 450+ funds we track, totaling an estimated $0.1 million in stock. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
How are insiders trading Senomyx Inc. (NASDAQ:SNMX)?
Insider buying is at its handiest when the company we’re looking at has seen transactions within the past half-year. Over the latest half-year time frame, Senomyx Inc. (NASDAQ:SNMX) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Senomyx Inc. (NASDAQ:SNMX). These stocks are Gulf Resources, Inc. (NASDAQ:GURE), Pacific Ethanol Inc (NASDAQ:PEIX), Penford Corporation (NASDAQ:PENX), Metabolix, Inc. (NASDAQ:MBLX), and Synthesis Energy Systems, Inc. (NASDAQ:SYMX). This group of stocks are in the specialty chemicals industry and their market caps match SNMX’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Gulf Resources, Inc. (NASDAQ:GURE) | 4 | 0 | 0 |
| Pacific Ethanol Inc (NASDAQ:PEIX) | 1 | 0 | 0 |
| Penford Corporation (NASDAQ:PENX) | 3 | 1 | 0 |
| Metabolix, Inc. (NASDAQ:MBLX) | 3 | 5 | 0 |
| Synthesis Energy Systems, Inc. (NASDAQ:SYMX) | 1 | 1 | 1 |
With the returns demonstrated by the aforementioned strategies, everyday investors should always monitor hedge fund and insider trading activity, and Senomyx Inc. (NASDAQ:SNMX) is no exception.
