It’s a little-known fact that stock performance is not evenly distributed (i.e. you don’t have a 50/50 chance of picking a market-beating stock). In fact, despite the S&P 500 gaining about 5.2% between November 1, 2014 and October 30, 2015, less than 49% of the stocks in the index beat the market during that time. In contrast, the 30 stocks from the index which were the most popular among the investors that we track returned 9.5% during that time and 63% of them beat the market. This shows that while hedge funds get a lot of flak from the mainstream media for their performance, it can be rewarding to follow their moves using the right sets of data. Even then, there is never a fool proof strategy to generating returns, as even the collective wisdom of top hedge funds gets it wrong some times, as in the case of some of their top picks from the index like Micron and Anadarko. The data though, shows that following the collective wisdom of select hedge funds can be a very wise move overall.
StemCells Inc (NASDAQ:STEM) was in 5 hedge funds’ portfolios at the end of the third quarter of 2015. STEM investors should pay attention to an increase in enthusiasm from smart money of late. There were 4 hedge funds in our database with STEM holdings at the end of the previous quarter. At the end of this article we will also compare STEM to other stocks including Erickson Air-Crane Inc (NASDAQ:EAC), 1347 Capital Corp (NASDAQ:TFSCU), and Streamline Health Solutions Inc. (NASDAQ:STRM) to get a better sense of its popularity.
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With all of this in mind, let’s check out the new action surrounding StemCells Inc (NASDAQ:STEM).
What have hedge funds been doing with StemCells Inc (NASDAQ:STEM)?
Heading into Q4, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the second quarter. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Sabby Capital, managed by Hal Mintz, holds the most valuable position in StemCells Inc (NASDAQ:STEM). Sabby Capital has an $0.9 million position in the stock, comprising less than 0.1% of its 13F portfolio. On Sabby Capital’s heels is John Zaro of Bourgeon Capital, with an $0.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism encompass Jim Simons’s Renaissance Technologies, D. E. Shaw’s D E Shaw and Ken Griffin’s Citadel Investment Group.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as StemCells Inc (NASDAQ:STEM) but similarly valued. These stocks are Erickson Air-Crane Inc (NASDAQ:EAC), 1347 Capital Corp (NASDAQ:TFSCU), Streamline Health Solutions Inc. (NASDAQ:STRM), and Enzon Pharmaceuticals, Inc. (NASDAQ:ENZN). All of these stocks’ market caps are closest to STEM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EAC | 5 | 10007 | 1 |
| TFSCU | 4 | 9765 | 0 |
| STRM | 7 | 12193 | -1 |
| ENZN | 7 | 9495 | 1 |
As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $1 million in STEM’s case. Streamline Health Solutions Inc. (NASDAQ:STRM) is the most popular stock in this table. On the other hand 1347 Capital Corp (NASDAQ:TFSCU) is the least popular one with only 4 bullish hedge fund positions. StemCells Inc (NASDAQ:STEM) 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 STRM might be a better candidate to consider a long position.
