Neothetics Inc (NEOT): Is Smart Money Right About This Stock?

Because Neothetics Inc (NASDAQ:NEOT) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there was a specific group of money managers that decided to sell off their positions entirely heading into Q4. Intriguingly, Nathan Fischel’s DAFNA Capital Management cut the largest stake of the 700 funds monitored by Insider Monkey, valued at about $1.7 million, and Ken Greenberg and David Kim’s Ghost Tree Capital was right behind this move, as the fund sold off about $0.4 million worth of shares. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 2 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Neothetics Inc (NASDAQ:NEOT) but similarly valued. We will take a look at Amber Road Inc (NYSE:AMBR), Alaska Communications Systems Group Inc (NASDAQ:ALSK), ASB Bancorp Inc (NASDAQ:ASBB), and PC Tel Inc (NASDAQ:PCTI). All of these stocks’ market caps are similar to NEOT’s market cap.

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $15 million, which is higher than the $4 million in NEOT’s case. Amber Road Inc (NYSE:AMBR) is the most popular stock in this table, while ASB Bancorp Inc (NASDAQ:ASBB) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Neothetics Inc (NASDAQ:NEOT) is even less popular than ASBB. 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.