Is DURECT Corporation (NASDAQ:DRRX) A Good Stock To Buy?

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As one would reasonably expect, specific money managers were breaking ground themselves. Redmile Group, managed by Jeremy Green, created the biggest position in DURECT Corporation (NASDAQ:DRRX). Redmile Group had $5.1 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital and John Overdeck and David Siegel’s Two Sigma Advisors also initiated brand new DRRX positions during the third quarter.

Let’s now review hedge fund activity in other stocks similar to DURECT Corporation (NASDAQ:DRRX). We will take a look at Bluerock Residential Growth REIT Inc (NYSEMKT:BRG), Flexsteel Industries, Inc. (NASDAQ:FLXS), Tokai Pharmaceuticals Inc (NASDAQ:TKAI), and MCBC Holdings Inc (NASDAQ:MCFT). All of these stocks’ market caps resemble DRRX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BRG 12 22940 -1
FLXS 5 3414 0
TKAI 7 23972 0
MCFT 7 143621 7

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 $48 million. That figure was $57 million in DRRX’s case. Bluerock Residential Growth REIT Inc (NYSEMKT:BRG) is the most popular stock in this table, while Flexsteel Industries, Inc. (NASDAQ:FLXS) is the least popular one with only 5 bullish hedge fund positions. DURECT Corporation (NASDAQ:DRRX) 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 BRG might be a better candidate to consider a long position.

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