Is Alliqua Biomedical Inc (NASDAQ:ALQA) a good stock to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.
Alliqua Biomedical Inc was in 9 hedge funds’ portfolios at the end of the third quarter of 2015. ALQA shareholders have witnessed unchanged hedge fund sentiment lately. There were 9 hedge funds in our database with ALQA 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 YuMe Inc (NYSE:YUME), Fuel Systems Solutions, Inc. (NASDAQ:FSYS), and Atlantic Coast Financial Corp (NASDAQ:ACFC) to gather more data points.
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Hedge fund activity in Alliqua Biomedical Inc (NASDAQ:ALQA)
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were bullish in this stock, a change of 0% from one quarter earlier. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Perceptive Advisors, managed by Joseph Edelman, holds the largest position in Alliqua Biomedical Inc (NASDAQ:ALQA). Perceptive Advisors has a $6.1 million position in the stock, comprising 0.5% of its 13F portfolio. The second largest stake is held by Deerfield Management, led by James E. Flynn, holding a $5.3 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism encompass Kurt von Emster’s venBio Select Advisor, Efrem Kamen’s Pura Vida Investments and Hal Mintz’s Sabby Capital.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Ardsley Partners. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Renaissance Technologies).
Let’s also examine hedge fund activity in other stocks similar to Alliqua Biomedical Inc (NASDAQ:ALQA). These stocks are YuMe Inc (NYSE:YUME), Fuel Systems Solutions, Inc. (NASDAQ:FSYS), Atlantic Coast Financial Corp (NASDAQ:ACFC), and PharmAthene, Inc. (NYSEAMEX:PIP). All of these stocks’ market caps are similar to ALQA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| YUME | 5 | 2162 | -4 |
| FSYS | 5 | 16702 | -3 |
| ACFC | 4 | 8926 | -2 |
| PIP | 6 | 22519 | 1 |
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $13 million.That figure was $17 millions in ALQA’s case. PharmAthene, Inc. (NYSEAMEX:PIP) is the most popular stock in this table. On the other hand Atlantic Coast Financial Corp (NASDAQ:ACFC) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Alliqua Biomedical Inc (NASDAQ:ALQA) is more popular among hedge funds. Considering that hedge funds are fond of this stock, it may be a good idea to analyze it in detail and potentially include it in your portfolio.