Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
One stock that registered an increase in popularity among hedge funds during the third quarter is Galena Biopharma Inc (NASDAQ:GALE), in which seven funds tracked by Insider Monkey amassed long positions. However, 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 Alliance HealthCare Services, Inc. (NASDAQ:AIQ), North Atlantic Drilling Ltd. (NYSE:NADL), and Poage Bankshares Inc (NASDAQ:PBSK) to gather more data points.
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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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Now, let’s take a glance at the recent action encompassing Galena Biopharma Inc (NASDAQ:GALE).
How have hedgies been trading Galena Biopharma Inc (NASDAQ:GALE)?
At Q3’s end, seven funds tracked by Insider Monkey were bullish on this stock, compared to six funds a quarter earlier. On the other hand, there were a total of four hedge funds with a bullish position in GALE at the beginning of this year. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Anand Parekh’s Alyeska Investment Group holds the number one position in Galena Biopharma Inc (NASDAQ:GALE). Alyeska Investment Group has a $0.6 million call position in the stock. Other professional money managers that hold long positions include Hal Mintz’s Sabby Capital, Ken Griffin’s Citadel Investment Group, and Brian Taylor’s Pine River Capital Management. 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. Among the funds that initiated new stakes in the company during the third quarter is Millennium Management, one of the 10 largest hedge funds in the world.
Having said that, let’s see how the smart money sentiment towards Galena Biopharma compares with other stocks with similar market caps.
Let’s check out hedge fund activity in other stocks similar to Galena Biopharma Inc (NASDAQ:GALE). We will take a look at Alliance HealthCare Services, Inc. (NASDAQ:AIQ), North Atlantic Drilling Ltd. (NYSE:NADL), Poage Bankshares Inc (NASDAQ:PBSK), and Magal Security Systems Ltd. (USA) (NASDAQ:MAGS). All of these stocks’ market caps are similar to GALE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AIQ | 4 | 5400 | 0 |
| NADL | 4 | 1965 | -3 |
| PBSK | 2 | 2774 | -1 |
| MAGS | 2 | 1821 | -2 |
As you can see these stocks had an average of three funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $1 million in GALE’s case. Alliance HealthCare Services, Inc. (NASDAQ:AIQ) and North Atlantic Drilling Ltd. (NYSE:NADL) are the most popular stocks in this table, while Poage Bankshares Inc (NASDAQ:PBSK) and Magal Security Systems Ltd. (USA) (NASDAQ:MAGS) are the least popular with only two bullish hedge fund positions. Compared to these stocks Galena Biopharma Inc (NASDAQ:GALE) 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
