We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: D E Shaw. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case, because only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Iguana Healthcare Management).
Let’s now take a look at hedge fund activity in other stocks similar to Peregrine Pharmaceuticals (NASDAQ:PPHM). We will take a look at Black Diamond Inc (NASDAQ:BDE), China XD Plastics Co Ltd (NASDAQ:CXDC), Enzymotec Ltd (NASDAQ:ENZY), and Bonanza Creek Energy Inc (NYSE:BCEI). This group of stocks’ market caps are closest to PPHM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BDE | 8 | 23683 | -4 |
| CXDC | 4 | 12822 | 1 |
| ENZY | 5 | 68203 | 0 |
| BCEI | 15 | 53754 | -3 |
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was just $2 million in PPHM’s case. Bonanza Creek Energy Inc (NYSE:BCEI) is the most popular stock in this table with a total of 15 funds reporting long positions. On the other hand China XD Plastics Co Ltd (NASDAQ:CXDC) is the least popular one with only 4 bullish hedge fund positions. Peregrine Pharmaceuticals (NASDAQ:PPHM) 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 BCEI might be a better candidate to consider a long position.
