Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI) shareholders have witnessed a decrease in enthusiasm from smart money of late. The market sentiment surrounding OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI) looked the same, with its shares losing 4.29% value throughout the quarter. We will find out more about the hedge funds that maintained their stakes in OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI), at the end of September.
In order to understand the hedge fund behavior towards stocks with a similar market cap, we will also compare OGXI to other stocks, including Verastem Inc (NASDAQ:VSTM), The Bon-Ton Stores, Inc. (NASDAQ:BONT), and Gulf Resources, Inc. (NASDAQ:GURE) to get a better sense of its popularity.
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In the eyes of most market participants, hedge funds are viewed as slow, outdated financial vehicles of the past. While there are greater than 8000 funds in operation today, We hone in on the moguls of this club, around 700 funds. It is estimated that this group of investors orchestrates bulk of all hedge funds’ total capital, and by tailing their first-class investments, Insider Monkey has spotted a few investment strategies that have historically outperformed Mr. Market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Now, we’re going to take a look at the new action regarding OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI).
What have hedge funds been doing with OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI)?
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a decrease of 29% from the second quarter. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the largest position in OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI), worth close to $1.6 million, corresponding to less than 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Charles Davidson of Wexford Capital, with a $0.7 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish include Israel Englander’s Millennium Management, Jonathan Lourie and Stuart Fiertz’s Cheyne Capital, and Richard Driehaus’ Driehaus Capital.
Due to the fact that OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI) has experienced a bearish sentiment from the smart money, logic holds that there was a specific group of hedgies that elected to cut their full holdings last quarter. At the top of the heap, Mark Lampert’s Biotechnology Value Fund / BVF Inc dumped the biggest stake of the 700 funds watched by Insider Monkey, totaling an estimated $2.4 million in stock, and Chao Ku’s Nine Chapters Capital Management was right behind this move, as the fund said goodbye to about $0.2 million worth of shares. These moves are interesting, as total hedge fund interest dropped by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI) but similarly valued. These stocks are Verastem Inc (NASDAQ:VSTM), The Bon-Ton Stores, Inc. (NASDAQ:BONT), Gulf Resources, Inc. (NASDAQ:GURE), and Aviat Networks Inc (NASDAQ:AVNW). This group of stocks’ market valuations are similar to OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VSTM | 4 | 3969 | -9 |
| BONT | 8 | 15793 | -1 |
| GURE | 4 | 2603 | 0 |
| AVNW | 5 | 14921 | -1 |
As you can see, these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $3 million in OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI)’s case. The Bon-Ton Stores, Inc. (NASDAQ:BONT) is the most popular stock in this table. On the other hand, Verastem Inc (NASDAQ:VSTM) is the least popular one with only 4 bullish hedge fund positions. OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI) 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, The Bon-Ton Stores, Inc. (NASDAQ:BONT) might be a better candidate to consider a long position.
