Is Changyou.Com Ltd (ADR) (CYOU) A Good Stock To Buy?

Because Changyou.Com Ltd (ADR) (NASDAQ:CYOU) has experienced falling interest from the smart money, logic holds that there was a specific group of fund managers that decided to sell off their entire stakes in the third quarter. Intriguingly, Jacob Gottlieb’s Visium Asset Management dropped the biggest stake of all the hedgies monitored by Insider Monkey, comprising about $0.5 million in stock, and Peter Muller’s PDT Partners was right behind this move, as the fund dumped about $0.4 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 3 funds in the third quarter.

Let’s now review hedge fund activity in other stocks similar to Changyou.Com Ltd (ADR) (NASDAQ:CYOU). These stocks are NetGear, Inc. (NASDAQ:NTGR), Encore Capital Group, Inc. (NASDAQ:ECPG), Inphi Corporation (NYSE:IPHI), and Remy International Inc (NASDAQ:REMY). This group of stocks’ market caps are closest to CYOU’s market cap.

As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $124 million. That figure was $13 million in CYOU’s case. NetGear, Inc. (NASDAQ:NTGR) is the most popular stock in this table. On the other hand Encore Capital Group, Inc. (NASDAQ:ECPG) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Changyou.Com Ltd (ADR) (NASDAQ:CYOU) is even less popular than ECPG. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.