The market has been volatile as the Federal Reserve winds down its easy money policies. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25th and the end of October. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure, and the funds’ movements is one of the reasons why the major indexes have retraced. In this article, we analyze what the smart money thinks of Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX) and find out how it is affected by hedge funds’ moves.
Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds’ portfolios at the end of the third quarter of 2015. 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 Tremor Video Inc (NYSE:TRMR), Trillium Therapeutics Inc. (NASDAQ:TRIL), and RADCOM Ltd. (NASDAQ:RDCM) to gather more data points.
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In the financial world there are plenty of metrics stock market investors use to appraise stocks. A duo of the most useful metrics are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the best investment managers can outperform the broader indices by a healthy margin (see the details here).
Now, let’s take a look at the latest action regarding Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX).
How are hedge funds trading Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX)?
According to Insider Monkey’s hedge fund database, Millennium Management, managed by Israel Englander, holds the most valuable position in Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX). Millennium Management has an $3.6 million position in the stock, comprising less than 0.1% of its 13F portfolio. On Millennium Management’s heels is Renaissance Technologies, managed by Jim Simons, which holds an $1.1 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions include Peter Muller’s PDT Partners, and Chuck Royce’s Royce & Associates.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX) but similarly valued. We will take a look at Tremor Video Inc (NYSE:TRMR), Trillium Therapeutics Inc. (NASDAQ:TRIL), RADCOM Ltd. (NASDAQ:RDCM), and Mast Therapeutics Inc (NYSEMKT:MSTX). This group of stocks’ market caps match CPIX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TRMR | 7 | 8047 | -1 |
| TRIL | 8 | 14983 | 1 |
| RDCM | 4 | 13912 | -1 |
| MSTX | 7 | 8108 | 0 |
As you can see these stocks had an average of 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $14 million in CPIX’s case. Trillium Therapeutics Inc. (NASDAQ:TRIL) is the most popular stock in this table. On the other hand RADCOM Ltd. (NASDAQ:RDCM) is the least popular one with only 4 bullish hedge fund positions. Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX) 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 TRIL might be a better candidate to consider a long position.
