Is Biota Pharmaceuticals Inc (BOTA) A Good Stock To Buy?

There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Biota Pharmaceuticals Inc (NASDAQ:BOTA).

Is Biota Pharmaceuticals Inc (NASDAQ:BOTA) going to take off soon? Prominent investors are becoming less confident. The number of long hedge fund positions were trimmed by 3 lately. Biota Pharmaceuticals Inc (NASDAQ:BOTA) was in 5 hedge funds’ portfolios at the end of September. There were 8 hedge funds in our database with Biota Pharmaceuticals Inc (NASDAQ:BOTA) positions at the end of the previous quarter. At the end of this article, we will also compare Biota Pharmaceuticals Inc (NASDAQ:BOTA) to other stocks, including IRIDEX Corporation (NASDAQ:IRIX), Approach Resources Inc. (NASDAQ:AREX), and First South Bancorp, Inc. (NASDAQ:FSBK) to get a better sense of its popularity.

At the moment, there are a lot of methods that stock market investors can use to size up stocks. A couple of the most useful methods are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best hedge fund managers can trounce the broader indices by a solid amount (see the details here).

With all of this in mind, let’s take a look at the key action regarding Biota Pharmaceuticals Inc (NASDAQ:BOTA).

What does the smart money think about Biota Pharmaceuticals Inc (NASDAQ:BOTA)?

At the end of the thrid quarter, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 38% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Kevin Kotler’s Broadfin Capital has the number one position in Biota Pharmaceuticals Inc (NASDAQ:BOTA), worth close to $6.9 million, corresponding to 0.4% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, which holds a $1 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions encompass Mark Lampert’s Biotechnology Value Fund / BVF Inc, Israel Englander’s Millennium Management, and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners.

Seeing as Biota Pharmaceuticals Inc (NASDAQ:BOTA) has experienced a declination in interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few money managers that slashed their entire stakes last quarter. It’s worth mentioning that Julian Baker and Felix Baker’s Baker Bros. Advisors sold off the largest investment of the 700 funds monitored by Insider Monkey, comprising close to $1.7 million in stock. Peter Kolchinsky’s fund, RA Capital Management, also dumped its stock, about $1.7 million worth of shares. These moves are interesting, as total hedge fund interest fell by 3 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Biota Pharmaceuticals Inc (NASDAQ:BOTA) but similarly valued. We will take a look at IRIDEX Corporation (NASDAQ:IRIX), Approach Resources Inc. (NASDAQ:AREX), First South Bancorp, Inc. (NASDAQ:FSBK), and Magnum Hunter Resources Corp (NYSE:MHR). All of these stocks’ market caps resemble Biota Pharmaceuticals Inc (NASDAQ:BOTA)’s market cap.

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 $6 million. That figure was $9 million in Biota Pharmaceuticals Inc (NASDAQ:BOTA)’s case. Magnum Hunter Resources Corp (NYSE:MHR) is the most popular stock in this table. On the other hand, IRIDEX Corporation (NASDAQ:IRIX) is the least popular one with only 4 bullish hedge fund positions. Biota Pharmaceuticals Inc (NASDAQ:BOTA) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Magnum Hunter Resources Corp (NYSE:MHR) might be a better candidate to consider a long position.