Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third most popular stock, lost 10% amid uncertainty regarding the interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Is Inventure Foods Inc (NASDAQ:SNAK) ready to rally soon? Prominent investors are selling, and the declining share prices during the quarter could be a possible reason, as the shares of Inventure Foods Inc were down 12.51%. The number of bullish hedge fund bets went down by 4 in recent months. Inventure Foods Inc (NASDAQ:SNAK) was in 6 hedge funds’ portfolios at the end of September. There were 10 hedge funds in our database with Inventure Foods Inc (NASDAQ:SNAK) positions at the end of the previous quarter. For a better understanding of the hedge fund sentiment, we decided to cover hedge funds holding stake in the company.
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 EMCORE Corporation (NASDAQ:EMKR), ProShares UltraShort Nasdaq Biotech (NASDAQ:BIS), and Monroe Capital Corp (NASDAQ:MRCC) to gather more data points.
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To the average investor, there are dozens of gauges market participants have at their disposal to appraise stocks. Some of the most underrated gauges are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the elite investment managers can beat the broader indices by a significant amount (see the details here).
With all of this in mind, we’re going to take a look at the key action encompassing Inventure Foods Inc (NASDAQ:SNAK).
How are hedge funds trading Inventure Foods Inc (NASDAQ:SNAK)?
Heading into Q4, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 40% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates has the largest position in Inventure Foods Inc (NASDAQ:SNAK), worth close to $5.1 million, amounting to less than 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Alyesa Investment Groupk, led by Anand Parekh, holding a $3.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions include Brian C. Freckmann’s Lyon Street Capital, Mark N. Diker’s Diker Management, and John Zaro’s Bourgeon Capital.
Because Inventure Foods Inc (NASDAQ:SNAK) has witnessed a declining sentiment from the smart money, it’s easy to see that there lies a certain “tier” of hedge funds who sold off their full holdings heading into Q4. Intriguingly, Steven Boyd’s Armistice Capital dropped the biggest stake of the 700 funds tracked by Insider Monkey, totaling about $6.3 million in stock. Charles Paquelet’s fund, Skylands Capital, also said goodbye to its stock, about $1.6 million worth of shares. These transactions are important to note, as total hedge fund interest dropped by 4 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Inventure Foods Inc (NASDAQ:SNAK). These stocks are EMCORE Corporation (NASDAQ:EMKR), ProShares UltraShort Nasdaq Biotech (NASDAQ:BIS), Monroe Capital Corp (NASDAQ:MRCC), and Aspen Aerogels Inc (NYSE:ASPN). This group of stocks’ market caps are similar to Inventure Foods Inc (NASDAQ:SNAK)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EMKR | 16 | 32005 | 4 |
| BIS | 4 | 30595 | -1 |
| MRCC | 4 | 1847 | 3 |
| ASPN | 4 | 9894 | 2 |
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 $19 million. That figure was $12 million in Inventure Foods Inc (NASDAQ:SNAK)’s case. EMCORE Corporation (NASDAQ:EMKR) is the most popular stock in this table. On the other hand, ProShares UltraShort Nasdaq Biotech (NASDAQ:BIS) is the least popular one with only 4 bullish hedge fund positions. Inventure Foods Inc (NASDAQ:SNAK) 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, EMCORE Corporation (NASDAQ:EMKR) might be a better candidate to consider a long position.
