Is Intevac, Inc. (IVAC) A Good Stock To Buy?

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Intevac, Inc. (NASDAQ:IVAC)? The smart money sentiment can provide an answer to this question.

Intevac, Inc. (NASDAQ:IVAC) has seen a slight decrease in hedge fund sentiment in recent months with 8 funds holding shares at the end of September, down by one over the 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 SCYNEXIS Inc (NASDAQ:SCYX), Lakeland Industries, Inc. (NASDAQ:LAKE), and Nicholas Financial, Inc. (NASDAQ:NICK) to gather more data points.

To most market participants, hedge funds are viewed as slow, outdated financial tools of the past. While there are more than an 8000 funds with their doors open at present, we look at the masters of this club, approximately 700 funds. It is estimated that this group of investors oversees the lion’s share of all hedge funds’ total capital, and by following their best picks, Insider Monkey has revealed several investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Keeping this in mind, let’s take a glance at the latest action surrounding Intevac, Inc. (NASDAQ:IVAC).

What have hedge funds been doing with Intevac, Inc. (NASDAQ:IVAC)?

At the Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Matthew Drapkin and Steven R. Becker’s Becker Drapkin Management has the largest position in Intevac, Inc. (NASDAQ:IVAC), worth close to $10.4 million, accounting for 11.6% of its total 13F portfolio. The second largest stake is held by Royce & Associates, managed by Chuck Royce, which holds an $8.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish contain Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and John Overdeck and David Siegel’s Two Sigma Advisors.

Because Intevac, Inc. (NASDAQ: IVAC) has experienced a decline in interest from the smart money, it’s safe to say that there exists a select few funds that slashed their entire stakes last quarter. Intriguingly, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners dumped the biggest stake of all the hedgies monitored by Insider Monkey, worth an estimated $0.1 million in stock. Gavin Saitowitz and Cisco J. del Valle’s fund, Springbok Capital, also cut its stock, about $0 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 1 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Intevac, Inc. (NASDAQ:IVAC) but similarly valued. These stocks are SCYNEXIS Inc (NASDAQ:SCYX), Lakeland Industries, Inc. (NASDAQ:LAKE), Nicholas Financial, Inc. (NASDAQ:NICK), and Managed High Yield Plus Fund Inc. (NYSE:HYF). All of these stocks’ market caps are closest to IVAC’s market cap.

As you can see these stocks had an average of six hedge funds with bullish positions and the average amount invested in these stocks was $13 million, significantly below the $40 million that funds held collectively in IVAC. SCYNEXIS Inc (NASDAQ:SCYX) is the most popular stock in this table. On the other hand Nicholas Financial, Inc. (NASDAQ:NICK) is the least popular one with only four bullish hedge fund positions. Intevac, Inc. (NASDAQ:IVAC) is not the most popular stock in this group, but hedge fund interest is above average. We can view it as a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SCYX might be a better candidate to consider a long position.