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 MediciNova, Inc. (NASDAQ:MNOV).
MediciNova, Inc. (NASDAQ:MNOV) investors should pay attention to an increase in hedge fund interest lately. 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 Sky-mobi Ltd (ADR) (NASDAQ:MOBI), Transition Therapeutics Inc (USA) (NASDAQ:TTHI), and Westell Technologies Inc. (NASDAQ:WSTL) to gather more data points.
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According to most shareholders, hedge funds are viewed as worthless, outdated investment vehicles of yesteryear. While there are over 8000 funds with their doors open at the moment, We hone in on the elite of this club, approximately 700 funds. Most estimates calculate that this group of people direct the lion’s share of all hedge funds’ total asset base, and by shadowing their top stock picks, Insider Monkey has figured out a few investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points annually for a decade in their back tests.
Now, we’re going to take a peek at the key action encompassing MediciNova, Inc. (NASDAQ:MNOV).
Hedge fund activity in MediciNova, Inc. (NASDAQ:MNOV)
Heading into Q4, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exist a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Hal Mintz’s Sabby Capital has the most valuable position in MediciNova, Inc. (NASDAQ:MNOV), worth close to $1.4 million, amounting to 0.1% of its total 13F portfolio. On Sabby Capital’s heels is Millennium Management, managed by Israel Englander, which holds an $0.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that hold long positions consist of Ken Griffin’s Citadel Investment Group and Jim Simons’s Renaissance Technologies. Ken Griffin’s Citadel Investment Group. Ken Griffin’s Citadel Investment Group also initiated a $0 million position during the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as MediciNova, Inc. (NASDAQ:MNOV) but similarly valued. These stocks are Sky-mobi Ltd (ADR) (NASDAQ:MOBI), Transition Therapeutics Inc (USA) (NASDAQ:TTHI), Westell Technologies Inc. (NASDAQ:WSTL), and CorMedix Inc. (NYSEMKT:CRMD). This group of stocks’ market valuations resemble MNOV’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MOBI | 5 | 2169 | -1 |
| TTHI | 5 | 2598 | -1 |
| WSTL | 5 | 13218 | 0 |
| CRMD | 4 | 3908 | -2 |
As you can see these stocks had an average of 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $2 million in MNOV’s case. Sky-mobi Ltd (ADR) (NASDAQ:MOBI) is the most popular stock in this table. On the other hand CorMedix Inc. (NYSEMKT:CRMD) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks MediciNova, Inc. (NASDAQ:MNOV) has the same popularity as the least popular stock in the table, CRMD. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
