At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Is Alimera Sciences Inc (NASDAQ:ALIM) the right pick for your portfolio? The best stock pickers are undoubtedly in an optimistic mood. The number of long hedge fund bets advanced by 5 recently. There were 6 hedge funds in our database with ALIM 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 The L.S. Starrett Company (NYSE:SCX), The Goldfield Corporation (NYSEAMEX:GV), and ChinaCache Internatnl Hldgs Ltd (ADR) (NASDAQ:CCIH) to gather more data points.
Follow Alimera Sciences Inc (NASDAQ:ALIM)
Follow Alimera Sciences Inc (NASDAQ:ALIM)
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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With all of this in mind, we’re going to review the key action regarding Alimera Sciences Inc (NASDAQ:ALIM).
How have hedgies been trading Alimera Sciences Inc (NASDAQ:ALIM)?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 83% from the previous quarter. By comparison, 9 hedge funds held shares or bullish call options in ALIM heading into this year. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, James E. Flynn’s Deerfield Management has the most valuable position in Alimera Sciences Inc (NASDAQ:ALIM), worth close to $8.8 million, amounting to 0.4% of its total 13F portfolio. Coming in second is Behzad Aghazadeh of venBio Select Advisor, with a $5.3 million position; 0.9% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that are bullish consist of Thomas Ellis and Todd Hammer’s North Run Capital, William Leland Edwards’s Palo Alto Investors and Jeffrey Jay and David Kroin’s Great Point Partners. 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, some big names have been driving this bullishness. venBio Select Advisor, led by Behzad Aghazadeh, initiated the most outsized position in Alimera Sciences Inc (NASDAQ:ALIM). venBio Select Advisor had $5.3 million invested in the company at the end of the quarter. Jeffrey Jay and David Kroin’s Great Point Partners also made a $3.9 million investment in the stock during the quarter. The other funds with brand new ALIM positions are Steven Boyd’s Armistice Capital, Anand Parekh’s Alyeska Investment Group, and Ken Griffin’s Citadel Investment Group.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Alimera Sciences Inc (NASDAQ:ALIM) but similarly valued. These stocks are The L.S. Starrett Company (NYSE:SCX), The Goldfield Corporation (NYSEAMEX:GV), ChinaCache Internatnl Hldgs Ltd (ADR) (NASDAQ:CCIH), and Alcobra Ltd (NASDAQ:ADHD). This group of stocks’ market caps resemble ALIM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SCX | 3 | 10602 | 0 |
| GV | 3 | 4411 | -2 |
| CCIH | 4 | 1099 | 4 |
| ADHD | 14 | 28086 | -1 |
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $33 million in ALIM’s case. Alcobra Ltd (NASDAQ:ADHD) is the most popular stock in this table. On the other hand The L.S. Starrett Company (NYSE:SCX) is the least popular one with only 3 bullish hedge fund positions. Alimera Sciences Inc (NASDAQ:ALIM) 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 ADHD might be a better candidate to consider taking a long position in.
