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.
One stock that registered an increase in popularity among smart money investors in our database last quarter is CARDIOME PHARMA CORP (NASDAQ:CRME), in which eight funds held shares at the end of September. 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 Destination Maternity Corp (NASDAQ:DEST), Digirad Corporation (NASDAQ:DRAD), and Hydra Industries Acquisition Corp. (NASDAQ:HDRA) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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With all of this in mind, let’s take a peek at the latest action surrounding CARDIOME PHARMA CORP (NASDAQ:CRME).
How have hedgies been trading CARDIOME PHARMA CORP (NASDAQ:CRME)?
At the end of the third quarter, eight funds tracked by Insider Monkey held long positions in this stock, compared to six funds a quarter earlier. On the other hand, there were seven hedge funds with a bullish position in CRME at the beginning of this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Charles Clough’s Clough Capital Partners holds the number one position in CARDIOME PHARMA CORP (NASDAQ:CRME). Clough Capital Partners has a $9.6 million position in the stock. Coming in second is Justin John Ferayorni of Tamarack Capital Management, with a $6.9 million position; 2.2% of its 13F portfolio is allocated to the stock. Some other peers that are bullish contain Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management, Paul Hondros’s AlphaOne Capital Partners, and Hal Mintz’s Sabby 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-microcap stocks.
As aggregate interest increased, some big names have been driving this bullishness. Tamarack Capital Management assembled the most valuable position in CARDIOME PHARMA CORP (NASDAQ:CRME). Tamarack Capital Management had $6.9 million invested in the company at the end of the quarter. Sabby Capital also initiated a $1.5 million position during the quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as CARDIOME PHARMA CORP (NASDAQ:CRME) but similarly valued. We will take a look at Destination Maternity Corp (NASDAQ:DEST), Digirad Corporation (NASDAQ:DRAD), Hydra Industries Acquisition Corp. (NASDAQ:HDRA), and Kindred Biosciences Inc (NASDAQ:KIN). This group of stocks’ market caps match CRME’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DEST | 7 | 18830 | 1 |
| DRAD | 7 | 16894 | 2 |
| HDRA | 5 | 13605 | 1 |
| KIN | 7 | 53912 | 0 |
As you can see these stocks had an average of six funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $24 million in CRME’s case. Destination Maternity Corp (NASDAQ:DEST), Digirad Corporation (NASDAQ:DRAD), and Kindred Biosciences Inc (NASDAQ:KIN) are the most popular stocks in this table, each having seven funds holding long positions. On the other hand, Hydra Industries Acquisition Corp. (NASDAQ:HDRA) is the least popular one with only five bullish hedge fund positions. Compared to these stocks CARDIOME PHARMA CORP (NASDAQ:CRME) 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
