Is Westell Technologies Inc. (WSTL) A Micro-Cap Stock Worth Looking Into?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Westell Technologies Inc. (NASDAQ:WSTL) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Hedge fund interest in Westell Technologies Inc. (NASDAQ:WSTL) shares was flat during the previous quarter, despite a rise of 13% in the stock during the period. This is usually a negative indicator. Hedge funds that we track held 19% of Westell’s shares on September 30, up slightly quarter-over-quarter. At the end of this article we will also compare WSTL to other stocks including CorMedix Inc. (NYSEMKT:CRMD), NanoViricides Inc (NYSEMKT:NNVC), and TearLab Corporation (NASDAQ:TEAR) to get a better sense of its popularity.

At the moment there are tons of formulas stock market investors use to value stocks. A couple of the best formulas are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can outpace the S&P 500 by a significant margin (see the details here).

Now, let’s go over the latest action encompassing Westell Technologies Inc. (NASDAQ:WSTL).

What have hedge funds been doing with Westell Technologies Inc. (NASDAQ:WSTL)?

At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from one quarter earlier. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were increasing their holdings considerably (or had already accumulated large positions).

Of the funds tracked by Insider Monkey, Jeffrey Bronchick’s Cove Street Capital has the biggest position in Westell Technologies Inc. (NASDAQ:WSTL), worth close to $7.9 million, comprising 1% of its total 13F portfolio. The second-largest stake is held by Renaissance Technologies, with a $3.5 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions encompass Chuck Royce’s Royce & Associates, Israel Englander’s Millennium Management, and Cliff Asness’ AQR Capital Management.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts to attract their attention.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Westell Technologies Inc. (NASDAQ:WSTL) but similarly valued. These stocks are CorMedix Inc. (NYSEMKT:CRMD), NanoViricides Inc (NYSEMKT:NNVC), TearLab Corporation (NASDAQ:TEAR), and Datawatch Corporation (NASDAQ:DWCH). This group of stocks’ market valuations resemble WSTL’s market valuation.

As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $13 million in WSTL’s case. Datawatch Corporation (NASDAQ:DWCH) 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. Westell Technologies Inc. (NASDAQ:WSTL) is tied as the most popular stock in this group and has more money invested in it than any of the other stocks. This is a positive signal, despite the inactivity in the shares during Q3, and makes the stock one to consider if you’re in the market for a micro-cap stock.