Is Dawson Geophysical Company (DWSN) Going to Burn These Hedge Funds?

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

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Dawson Geophysical Company (NASDAQ:DWSN) but similarly valued. We will take a look at FalconStor Software, Inc. (NASDAQ:FALC), Crown Crafts, Inc. (NASDAQ:CRWS), Unwired Planet Inc (NASDAQ:UPIP), and ITT Educational Services, Inc. (NYSE:ESI). All of these stocks’ market caps are similar to DWSN’s market cap.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $16 million in DWSN’s case. ITT Educational Services, Inc. (NYSE:ESI) is the most popular stock in this table. On the other hand FalconStor Software, Inc. (NASDAQ:FALC) is the least popular one with only 6 bullish hedge fund positions. Dawson Geophysical Company (NASDAQ:DWSN) 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 more interested in. In this regard ESI might be a better candidate to consider a long position.