Here is What Hedge Funds Think About Foundation Medicine Inc (FMI)

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Is Foundation Medicine Inc (NASDAQ:FMI) a superb investment now? The best stock pickers are altogether getting more bullish. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings swelled by 3 recently. There were 11 hedge funds in our database with FMI holdings at the end of September. 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 Independent Bank Group Inc (NASDAQ:IBTX), Apptio Inc (NASDAQ:APTI), and Meridian Bioscience, Inc. (NASDAQ:VIVO) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Now, we’re going to check out the fresh action encompassing Foundation Medicine Inc (NASDAQ:FMI).

Hedge fund activity in Foundation Medicine Inc (NASDAQ:FMI)

Heading into the fourth quarter of 2016, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a jump of 38% from the second quarter of 2016. On the other hand, there were a total of 9 hedge funds with a bullish position in FMI at the beginning of this year. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Eli Casdin’s Casdin Capital has the biggest position in Foundation Medicine Inc (NASDAQ:FMI), worth close to $9.7 million, corresponding to 7.8% of its total 13F portfolio. Sitting at the No. 2 spot is Richard Mashaal of Rima Senvest Management, with an $8.4 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Some other peers that hold long positions consist of Kerr Neilson’s Platinum Asset Management, Steve Cohen’s Point72 Asset Management and William Harnisch’s Peconic Partners LLC. We should note that Peconic Partners LLC is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As one would reasonably expect, specific money managers were breaking ground themselves. Point72 Asset Management, led by Steve Cohen, created the biggest position in Foundation Medicine Inc (NASDAQ:FMI). According to regulatory filings, the fund had $2.5 million invested in the company at the end of the quarter. William Harnisch’s Peconic Partners LLC also initiated a $2.1 million position during the quarter. The following funds were also among the new FMI investors: D E Shaw, one of the biggest hedge funds in the world, Matthew Hulsizer’s PEAK6 Capital Management, and Ken Griffin’s Citadel Investment Group.

Let’s check out hedge fund activity in other stocks similar to Foundation Medicine Inc (NASDAQ:FMI). We will take a look at Independent Bank Group Inc (NASDAQ:IBTX), Apptio Inc (NASDAQ:APTI), Meridian Bioscience, Inc. (NASDAQ:VIVO), and Blueprint Medicines Corp (NASDAQ:BPMC). This group of stocks’ market valuations match FMI’s market valuation.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $74 million. That figure was $28 million in FMI’s case. Meridian Bioscience, Inc. (NASDAQ:VIVO) is the most popular stock in this table. On the other hand Independent Bank Group Inc (NASDAQ:IBTX) is the least popular one with only 9 bullish hedge fund positions. Foundation Medicine Inc (NASDAQ:FMI) 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 VIVO might be a better candidate to consider taking a long position in.

Disclosure: None