Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Histogenics Corp (NASDAQ:HSGX).
Histogenics Corp (NASDAQ:HSGX) shareholders have witnessed an increase in hedge fund sentiment of late. HSGX was in 6 hedge funds’ portfolios at the end of the third quarter of 2016. There were 3 hedge funds in our database with HSGX positions 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 Gevo, Inc. (NASDAQ:GEVO), Connecture Inc (NASDAQ:CNXR), and inTEST Corporation (NASDAQ:INTT) to gather more data points.
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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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Keeping this in mind, we’re going to take a peek at the latest action regarding Histogenics Corp (NASDAQ:HSGX).
How are hedge funds trading Histogenics Corp (NASDAQ:HSGX)?
Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Joseph Edelman’s Perceptive Advisors has the number one position in Histogenics Corp (NASDAQ:HSGX), worth close to $5.7 million, comprising 0.4% of its total 13F portfolio. On Perceptive Advisors’s heels is William Leland Edwards of Palo Alto Investors, with a $1.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish consist of Steven Boyd’s Armistice Capital, Jim Simons’ Renaissance Technologies, one of the largest hedge funds in the world, and Hal Mintz’s Sabby Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Perceptive Advisors assembled the biggest position in Histogenics Corp (NASDAQ:HSGX). Perceptive Advisors had $5.7 million invested in the company at the end of the quarter. Steven Boyd’s Armistice Capital also made a $0.9 million investment in the stock during the quarter. The only other fund with a brand new HSGX position is Efrem Kamen’s Pura Vida Investments.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Histogenics Corp (NASDAQ:HSGX) but similarly valued. These stocks are Gevo, Inc. (NASDAQ:GEVO), Connecture Inc (NASDAQ:CNXR), inTEST Corporation (NASDAQ:INTT), and MIND C.T.I. Ltd. (NASDAQ:MNDO). This group of stocks’ market caps resemble HSGX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GEVO | 4 | 148 | 4 |
| CNXR | 5 | 7956 | 0 |
| INTT | 3 | 6497 | -1 |
| MNDO | 3 | 1457 | -1 |
As you can see these stocks had an average of 3.75 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $9 million in HSGX’s case. Connecture Inc (NASDAQ:CNXR) is the most popular stock in this table. On the other hand inTEST Corporation (NASDAQ:INTT) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Histogenics Corp (NASDAQ:HSGX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers and invested more capital in its shares, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None