Is GenVec, Inc. (GNVC) A Good Stock To Buy?

Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about GenVec, Inc. (NASDAQ:GNVC).

Is GenVec, Inc. (NASDAQ:GNVC) the right investment to pursue these days? The smart money is becoming less confident. The number of long hedge fund positions dropped by 1 in recent months. What is even more surprising is the fact that the shares of GenVec, Inc. (NASDAQ:GNVC) were up 13.24% during the third quarter. We decided to find out more about the hedge fund sentiment by cover hedge funds that held positions in the company, at the end of the previous quarter.

In order to understand overall hedge fund behavior, we will also compare GenVec, Inc. (NASDAQ:GNVC) to other stocks, including Novacopper Inc (NYSEMKT:NCQ), LiqTech International Inc (NYSEMKT:LIQT), and Nuverra Environmental Solutions Inc (NYSE:NES) to get a better sense of its popularity.

To most market participants, hedge funds are seen as worthless, old financial vehicles of yesteryear. While there are more than 8000 funds in operation at the moment, Our experts choose to focus on the bigwigs of this club, around 700 funds. These hedge fund managers shepherd most of all hedge funds’ total asset base, and by watching their top investments, Insider Monkey has figured out numerous investment strategies that have historically exceeded the broader indices. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.

With all of this in mind, we’re going to take a look at the fresh action encompassing GenVec, Inc. (NASDAQ:GNVC).

Hedge fund activity in GenVec, Inc. (NASDAQ:GNVC)

Heading into Q4, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decrease of 17% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, EcoR1 Capital, managed by Oleg Nodelman, holds the biggest position in GenVec, Inc. (NASDAQ:GNVC). EcoR1 Capital has a $4.6 million position in the stock, comprising 2.1% of its 13F portfolio. Coming in second is Cormorant Asset Management, led by Bihua Chen, holding a $2.7 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism contain Joseph Edelman’s Perceptive Advisors, Nathan Fischel’s DAFNA Capital Management, and Renaissance Technologies.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically, a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case here because none of the 700+ hedge funds tracked by Insider Monkey identified GenVec, Inc. (NASDAQ:GNVC) as a viable investment and initiated a position in the stock.

Let’s check out hedge fund activity in other stocks similar to GenVec, Inc. (NASDAQ:GNVC). We will take a look at Novacopper Inc (NYSEMKT:NCQ), LiqTech International Inc (NYSEMKT:LIQT), Nuverra Environmental Solutions Inc (NYSE:NES), and Penn Virginia Corporation (NYSE:PVA). This group of stocks’ market valuations match GenVec, Inc. (NASDAQ:GNVC)’s market valuation.

As you can see, these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $9 million in GenVec, Inc. (NASDAQ:GNVC)’s case. Penn Virginia Corporation (NYSE:PVA) is the most popular stock in this table. On the other hand, LiqTech International Inc (NYSEMKT:LIQT) is the least popular one with only 4 bullish hedge fund positions. GenVec, Inc. (NASDAQ:GNVC) 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, Penn Virginia Corporation (NYSE:PVA) might be a better candidate to consider a long position.