Is Dimension Therapeutics Inc (DMTX) 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: Highbridge Capital Management. 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 DMTX 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 Dimension Therapeutics Inc (NASDAQ:DMTX) but similarly valued. We will take a look at Paragon Commercial Corp (NASDAQ:PBNC), Quantum Corp (NYSE:QTM), Independence Contract Drilling Inc (NYSE:ICD), and Blackstone/GSO Long-Short Credit Income (NYSE:BGX). This group of stocks’ market values are similar to DMTX’s market value.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $71 million in DMTX’s case. Quantum Corp (NYSE:QTM) is the most popular stock in this table. On the other hand Blackstone/GSO Long-Short Credit Income (NYSE:BGX) is the least popular one with only 3 bullish hedge fund positions. Dimension Therapeutics Inc (NASDAQ:DMTX) 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 QTM might be a better candidate to consider taking a long position in.

Disclosure: None