Is Aware, Inc. (AWRE) A Good Stock To Buy?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Aware, Inc. (NASDAQ:AWRE) in this article.

Is AWRE a good stock to buy? The smart money was betting on the stock. The number of long hedge fund bets went up by 2 lately. Aware, Inc. (NASDAQ:AWRE) was in 4 hedge funds’ portfolios at the end of March. The all time high for this statistic is 5. Our calculations also showed that AWRE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Thomas Claugus of GMT Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a gander at the fresh hedge fund action encompassing Aware, Inc. (NASDAQ:AWRE).

Do Hedge Funds Think AWRE Is A Good Stock To Buy Now?

At the end of March, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from the previous quarter. On the other hand, there were a total of 2 hedge funds with a bullish position in AWRE a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, DG Capital Management, managed by Dov Gertzulin, holds the biggest position in Aware, Inc. (NASDAQ:AWRE). DG Capital Management has a $3.9 million position in the stock, comprising 0.9% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, with a $3.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish consist of Ken Griffin’s Citadel Investment Group, Thomas E. Claugus’s GMT Capital and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position DG Capital Management allocated the biggest weight to Aware, Inc. (NASDAQ:AWRE), around 0.94% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to AWRE.

As industrywide interest jumped, key money managers have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, established the largest position in Aware, Inc. (NASDAQ:AWRE). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter. Thomas E. Claugus’s GMT Capital also initiated a $0.1 million position during the quarter. The only other fund with a new position in the stock is Ken Griffin’s Citadel Investment Group.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Aware, Inc. (NASDAQ:AWRE) but similarly valued. These stocks are Delcath Systems, Inc. (NASDAQ:DCTH), Ekso Bionics Holdings, Inc. (NASDAQ:EKSO), Monopar Therapeutics Inc. (NASDAQ:MNPR), PolarityTE, Inc. (NASDAQ:PTE), Natural Health Trends Corp. (NASDAQ:NHTC), 180 Degree Capital Corp. (NASDAQ:TURN), and Crown Crafts, Inc. (NASDAQ:CRWS). This group of stocks’ market caps resemble AWRE’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.1 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $7 million in AWRE’s case. Delcath Systems, Inc. (NASDAQ:DCTH) is the most popular stock in this table. On the other hand Monopar Therapeutics Inc. (NASDAQ:MNPR) is the least popular one with only 1 bullish hedge fund positions. Aware, Inc. (NASDAQ:AWRE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AWRE is 52.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on AWRE as the stock returned 11% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.