It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Hudson Technologies, Inc. (NASDAQ:HDSN).
Is Hudson Technologies, Inc. (NASDAQ:HDSN) a buy right now? The smart money is genuinely becoming more confident. The number of long hedge fund bets rose by 11 recently. There were 0 hedge funds in our database with HDSN holdings at the end of the previous 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 Jones Energy Inc (NYSE:JONE), INVUITY INC COM USD0.001 (NASDAQ:IVTY), and Alico, Inc. (NASDAQ:ALCO) to gather more data points.
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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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Keeping this in mind, let’s take a peek at the fresh action regarding Hudson Technologies, Inc. (NASDAQ:HDSN).
What does the smart money think about Hudson Technologies, Inc. (NASDAQ:HDSN)?
Heading into the fourth quarter of 2016, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock. On the other hand, there were a total of 0 hedge funds with a bullish position in HDSN 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.
When looking at the institutional investors followed by Insider Monkey, Chuck Royce’s Royce & Associates has the most valuable position in Hudson Technologies, Inc. (NASDAQ:HDSN), worth close to $6.2 million, corresponding to less than 0.1% of its total 13F portfolio. Coming in second is Becker Drapkin Management, led by Matthew Drapkin and Steven R. Becker, which holds a $5.1 million position; 12.2% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that are bullish encompass Robert B. Gillam’s McKinley Capital Management, Richard Driehaus’s Driehaus Capital and Renaissance Technologies, one of the largest hedge funds in the world. We should note that none of these elite 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 one would reasonably expect, key money managers have been driving this bullishness. McKinley Capital Management, led by Robert B. Gillam, established one of the most outsized position in Hudson Technologies, Inc. (NASDAQ:HDSN). McKinley Capital Management had $4.4 million invested in the company at the end of the quarter. The other funds with brand new HDSN positions are Warren Lammert’s Granite Point Capital, and Peter Muller’s PDT Partners.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Hudson Technologies, Inc. (NASDAQ:HDSN) but similarly valued. These stocks are Jones Energy Inc (NYSE:JONE), INVUITY INC COM USD0.001 (NASDAQ:IVTY), Alico, Inc. (NASDAQ:ALCO), and Nathan’s Famous, Inc. (NASDAQ:NATH). All of these stocks’ market caps match HDSN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JONE | 12 | 24390 | 0 |
| IVTY | 11 | 45090 | 5 |
| ALCO | 6 | 37250 | 0 |
| NATH | 5 | 28177 | -1 |
As you can see these stocks had an average of 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $22 million in HDSN’s case. Jones Energy Inc (NYSE:JONE) is the most popular stock in this table. On the other hand Nathan’s Famous, Inc. (NASDAQ:NATH) is the least popular one with only 5 bullish hedge fund positions. Hudson Technologies, Inc. (NASDAQ:HDSN) 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 JONE might be a better candidate to consider taking a long position in.
