It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Fluidigm Corporation (NASDAQ:FLDM).
Is Fluidigm Corporation (NASDAQ:FLDM) undervalued? Money managers are undoubtedly getting less optimistic. The number of bullish hedge fund positions experienced a decline of 4 in recent months. In this way, there were 8 hedge funds in our database with FLDM positions at the end of the third quarter. 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 CSS Industries, Inc. (NYSE:CSS), Reis Inc (NASDAQ:REIS), and Quotient Ltd (NASDAQ:QTNT) to gather more data points.
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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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Hedge fund activity in Fluidigm Corporation (NASDAQ:FLDM)
Heading into the fourth quarter of 2016, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, down by 33% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in FLDM at the beginning of this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, John A. Levin’s Levin Capital Strategies has the biggest position in Fluidigm Corporation (NASDAQ:FLDM), worth close to $35.1 million. On Levin Capital Strategies’ heels is Samuel Isaly of OrbiMed Advisors, with a $14 million position. Some other professional money managers with similar optimism consist of Phill Gross and Robert Atchinson’s Adage Capital Management, Millennium Management, one of the 10 largest hedge funds in the world, and Jim Simons’ Renaissance Technologies. 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.
Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that dropped their entire stakes in the stock during the third quarter. Intriguingly, Vishal Saluja and Pham Quang’s Endurant Capital Management dropped the biggest position of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $2.3 million in stock, and Ken Greenberg and David Kim’s Ghost Tree Capital was right behind this move, as the fund dumped about $1.4 million worth of shares.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Fluidigm Corporation (NASDAQ:FLDM) but similarly valued. These stocks are CSS Industries, Inc. (NYSE:CSS), Reis Inc (NASDAQ:REIS), Quotient Ltd (NASDAQ:QTNT), and Hallador Energy Co (NASDAQ:HNRG). All of these stocks’ market caps are closest to FLDM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CSS | 4 | 38011 | -1 |
| REIS | 4 | 29427 | 0 |
| QTNT | 9 | 73889 | 1 |
| HNRG | 7 | 4243 | 1 |
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 $36 million. That figure was $61 million in FLDM’s case. Quotient Ltd (NASDAQ:QTNT) is the most popular stock in this table. On the other hand CSS Industries, Inc. (NYSE:CSS) is the least popular one with only 4 bullish hedge fund positions. Fluidigm Corporation (NASDAQ:FLDM) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard QTNT might be a better candidate to consider taking a long position in.
Disclosure: None
