Concerns over a shift in Fed’s easy monetary policy have hit several hedge funds hard during the third quarter. A number of sectors are in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25, 2015 and October 30, 2015. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Pfenex Inc (NYSEMKT:PFNX).
Pfenex Inc (NYSEMKT:PFNX) was in 10 hedge funds’ portfolios at the end of the third quarter of 2015. PFNX has seen an increase in hedge fund interest recently. There were 8 hedge funds in our database with PFNX holdings at the end of the previous quarter. At the end of this article we will also compare PFNX to other stocks including Kimball Electronics Inc (NASDAQ:KE), Ocular Therapeutix Inc (NASDAQ:OCUL), and NeoGenomics, Inc. (NASDAQ:NEO) to get a better sense of its popularity.
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In today’s marketplace there are dozens of tools market participants put to use to appraise publicly traded companies. A duo of the less known tools are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the top fund managers can trounce their index-focused peers by a healthy amount (see the details here).
Keeping this in mind, let’s take a look at the new action regarding Pfenex Inc (NYSEMKT:PFNX).
How have hedgies been trading Pfenex Inc (NYSEMKT:PFNX)?
Heading into Q4, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the second quarter. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Joseph Edelman’s Perceptive Advisors has the number one position in Pfenex Inc (NYSEMKT:PFNX), worth close to $14.6 million, comprising 1.2% of its total 13F portfolio. The second largest stake is held by Bihua Chen of Cormorant Asset Management, with a $9.4 million position; 1.5% of its 13F portfolio is allocated to the stock. Other peers with similar optimism encompass Jacob Gottlieb’s Visium Asset Management, Paul Marshall and Ian Wace’s Marshall Wace LLP and James Dondero’s Highland Capital Management.
With a general bullishness amongst the heavyweights, some big names have jumped into Pfenex Inc (NYSEMKT:PFNX) headfirst. Highland Capital Management, managed by James Dondero, created the most valuable position in Pfenex Inc (NYSEMKT:PFNX). Highland Capital Management had $4.4 million invested in the company at the end of the quarter. Ken Fisher’s Fisher Asset Management also initiated a $0.5 million position during the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Pfenex Inc (NYSEMKT:PFNX) but similarly valued. We will take a look at Kimball Electronics Inc (NASDAQ:KE), Ocular Therapeutix Inc (NASDAQ:OCUL), NeoGenomics, Inc. (NASDAQ:NEO), and Perry Ellis International, Inc. (NASDAQ:PERY). This group of stocks’ market caps match PFNX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KE | 10 | 24047 | 1 |
| OCUL | 12 | 39161 | -2 |
| NEO | 9 | 15028 | 0 |
| PERY | 17 | 31983 | 1 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $47 million in PFNX’s case. Perry Ellis International, Inc. (NASDAQ:PERY) is the most popular stock in this table. On the other hand NeoGenomics, Inc. (NASDAQ:NEO) is the least popular one with only 9 bullish hedge fund positions. Pfenex Inc (NYSEMKT:PFNX) 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 PERY might be a better candidate to consider a long position.
