Where Do Hedge Funds Stand On Nephros, Inc. (NEPH)?

The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Nephros, Inc. (NASDAQ:NEPH).

Nephros, Inc. (NASDAQ:NEPH) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds’ portfolios at the end of the first quarter of 2021. Our calculations also showed that NEPH isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Salarius Pharmaceuticals, Inc. (NASDAQ:SLRX), Canterbury Park Holding Corporation (NASDAQ:CPHC), and NCS Multistage Holdings, Inc. (NASDAQ:NCSM) to gather more data points.

If you’d ask most stock holders, hedge funds are perceived as worthless, outdated investment tools of yesteryear. While there are more than 8000 funds trading at present, We hone in on the crème de la crème of this group, approximately 850 funds. Most estimates calculate that this group of people direct the lion’s share of the smart money’s total capital, and by tracking their finest investments, Insider Monkey has determined a number of investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Charles Davidson of Wexford Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a look at the key hedge fund action encompassing Nephros, Inc. (NASDAQ:NEPH).

Do Hedge Funds Think NEPH Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NEPH over the last 23 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

More specifically, Wexford Capital was the largest shareholder of Nephros, Inc. (NASDAQ:NEPH), with a stake worth $23.7 million reported as of the end of March. Trailing Wexford Capital was Samjo Capital, which amassed a stake valued at $3.7 million. Millennium Management, Citadel Investment Group, and Elkhorn Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Wexford Capital allocated the biggest weight to Nephros, Inc. (NASDAQ:NEPH), around 3.54% of its 13F portfolio. Samjo Capital is also relatively very bullish on the stock, setting aside 2.71 percent of its 13F equity portfolio to NEPH.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Parkman Healthcare Partners. 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 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).

Let’s now take a look at hedge fund activity in other stocks similar to Nephros, Inc. (NASDAQ:NEPH). These stocks are Salarius Pharmaceuticals, Inc. (NASDAQ:SLRX), Canterbury Park Holding Corporation (NASDAQ:CPHC), NCS Multistage Holdings, Inc. (NASDAQ:NCSM), Bioline RX Ltd (NASDAQ:BLRX), MMTec, Inc. (NASDAQ:MTC), Fujian Blue Hat Interactive Entertainment Technology Ltd. (NASDAQ:BHAT), and PHX Minerals Inc. (NYSE:PHX). This group of stocks’ market values resemble NEPH’s market value.

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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 $6 million. That figure was $28 million in NEPH’s case. Salarius Pharmaceuticals, Inc. (NASDAQ:SLRX) is the most popular stock in this table. On the other hand Canterbury Park Holding Corporation (NASDAQ:CPHC) is the least popular one with only 1 bullish hedge fund positions. Nephros, Inc. (NASDAQ:NEPH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NEPH is 63.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Hedge funds were also right about betting on NEPH as the stock returned 39.8% since the end of Q1 (through 6/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.