Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Is Aratana Therapeutics Inc (NASDAQ:PETX) the right pick for your portfolio? Investors who are in the know are absolutely taking a bullish view. The number of long hedge fund positions grew by 8 in recent months. PETX was in 17 hedge funds’ portfolios at the end of September. There were just 9 hedge funds in our database with PETX holdings at the end of June. 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 United Community Financial Corp (NASDAQ:UCFC), Kadmon Holdings Inc (NYSE:KDMN), and Spartan Motors Inc (NASDAQ:SPAR) to gather more data points.
Follow Aratana Therapeutics Inc. (NASDAQ:PETX)
Follow Aratana Therapeutics Inc. (NASDAQ:PETX)
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How are hedge funds trading Aratana Therapeutics Inc (NASDAQ:PETX)?
At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, an 89% surge from the second quarter of 2016. On the other hand, there were a total of 16 hedge funds with a bullish position in PETX at the beginning of this year, so hedge fund ownership for the year is only up slightly. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Broadfin Capital, led by Kevin Kotler, holds the number one position in Aratana Therapeutics Inc (NASDAQ:PETX). Broadfin Capital has a $28.9 million position in the stock, comprising 2.6% of its 13F portfolio. The second most bullish fund manager is D E Shaw, one of the biggest hedge funds in the world, which holds a $2.6 million position. Other peers that are bullish consist of Israel Englander’s Millennium Management, Neil Shah’s March Altus Capital Management, and Neil Chriss’ Hutchin Hill 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-micro-cap stocks.
As one would reasonably expect, key money managers have jumped into Aratana Therapeutics Inc (NASDAQ:PETX) headfirst. D E Shaw, founded by David E. Shaw, created the most valuable position in Aratana Therapeutics Inc (NASDAQ:PETX). Millennium Management also made a $2.5 million investment in the stock during the quarter. The other funds with brand new PETX positions are Hutchin Hill Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Cliff Asness’ AQR Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Aratana Therapeutics Inc (NASDAQ:PETX) but similarly valued. We will take a look at United Community Financial Corp (NASDAQ:UCFC), Kadmon Holdings Inc (NYSE:KDMN), Spartan Motors Inc (NASDAQ:SPAR), and Jive Software Inc (NASDAQ:JIVE). This group of stocks’ market caps resemble PETX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UCFC | 8 | 33765 | 0 |
| KDMN | 11 | 96607 | 11 |
| SPAR | 14 | 49536 | 1 |
| JIVE | 13 | 48850 | -2 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $42 million in PETX’s case. Spartan Motors Inc (NASDAQ:SPAR) is the most popular stock in this table. On the other hand United Community Financial Corp (NASDAQ:UCFC) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Aratana Therapeutics Inc (NASDAQ:PETX) 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.
Disclosure: None
