Hedge Funds Are Selling Otonomy Inc (OTIC)

We view hedge fund activity in the stock unfavorable, but in this case there was only a single elite fund selling its entire position: Point72 Asset Management. One elite fund selling its entire position doesn’t always imply a bearish intent. Theoretically a elite 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+ elite funds tracked by Insider Monkey identified OTIC as a viable investment and initiated a position in the stock.

Let’s now take a look at hedge fund activity in other stocks similar to Otonomy Inc (NASDAQ:OTIC). We will take a look at Titan International Inc (NYSE:TWI), ConnectOne Bancorp Inc (NASDAQ:CNOB), Ellington Financial LLC (NYSE:EFC), and Par Pacific Holdings, Inc. (NYSEMKT:PARR). This group of stocks’ market valuations are similar to OTIC’s market valuation.

As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $84 million. That figure was $84 million in OTIC’s case. Par Pacific Holdings, Inc. (NYSEMKT:PARR) is the most popular stock in this table. On the other hand Ellington Financial LLC (NYSE:EFC) is the least popular one with only 3 bullish hedge fund positions. Otonomy Inc (NASDAQ:OTIC) 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 PARR might be a better candidate to consider taking a long position in.