Are Hedge Funds Losing Interest In Ocera Therapeutics Inc (OCRX)?

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. 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 none of the 700+ hedge funds tracked by Insider Monkey identified OCRX as a viable investment and initiated a position in the stock.

Let’s go over hedge fund activity in other stocks similar to Ocera Therapeutics Inc (NASDAQ:OCRX). These stocks are AXT Inc (NASDAQ:AXTI), BlueLinx Holdings Inc. (NYSE:BXC), RCS Capital Corp (NYSE:RCAP), and Quest Resource Holding Corp (NASDAQ:QRHC). This group of stocks’ market values match OCRX’s market value.

As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $19 million, higher than the $15 million figure in OCRX’s case. RCS Capital Corp (NYSE:RCAP) is the most popular stock in this table with 15 funds holding shares, while AXT Inc (NASDAQ:AXTI) is the least popular one. Ocera Therapeutics Inc (NASDAQ:OCRX) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard RCAP might be a better candidate to consider a long position.