It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in SCYNEXIS Inc (NASDAQ:SCYX).
SCYNEXIS Inc (NASDAQ:SCYX) was in 10 hedge funds’ portfolios at the end of the third quarter of 2016. SCYX shareholders have witnessed a decrease in hedge fund sentiment recently. There were 12 hedge funds in our database with SCYX holdings at the end of the previous quarter. At the end of this article we will also compare SCYX to other stocks including Dover Motorsports, Inc. (NYSE:DVD), Natural Alternatives International, Inc. (NASDAQ:NAII), and OHR Pharmaceutical Inc (NASDAQ:OHRP) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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What have hedge funds been doing with SCYNEXIS Inc (NASDAQ:SCYX)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 17% from one quarter earlier, after hedge fund ownership peaked at the end of June. The graph below displays the number of hedge funds with bullish positions in SCYX over the last 5 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Kevin Kotler’s Broadfin Capital holds the number one position in SCYNEXIS Inc (NASDAQ:SCYX). Broadfin Capital has a $5.7 million position in the stock. Coming in second is James E. Flynn’s Deerfield Management, which holds a $4.1 million position. Remaining hedge funds and institutional investors that are bullish comprise Kris Jenner, Gordon Bussard, and Graham McPhail’s Rock Springs Capital Management, James Dondero’s Highland Capital Management, and Julian Baker and Felix Baker’s Baker Bros. Advisors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually got rid of their positions entirely. Interestingly, Steven Boyd’s Armistice Capital got rid of the biggest stake of the “upper crust” of funds studied by Insider Monkey, totaling an estimated $1.5 million in stock. Hal Mintz’s fund, Sabby Capital, also cut its stock, about $1.2 million worth.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as SCYNEXIS Inc (NASDAQ:SCYX) but similarly valued. We will take a look at Dover Motorsports, Inc. (NYSE:DVD), Natural Alternatives International, Inc. (NASDAQ:NAII), OHR Pharmaceutical Inc (NASDAQ:OHRP), and China Finance Online Co. (ADR) (NASDAQ:JRJC). This group of stocks’ market valuations are closest to SCYX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DVD | 4 | 13337 | -1 |
| NAII | 4 | 5995 | 0 |
| OHRP | 4 | 1789 | 0 |
| JRJC | 2 | 334 | -2 |
As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $19 million in SCYX’s case. Dover Motorsports, Inc. (NYSE:DVD) is the most popular stock in this table. On the other hand China Finance Online Co. (ADR) (NASDAQ:JRJC) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks SCYNEXIS Inc (NASDAQ:SCYX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
