Is LMI Aerospace, Inc. (LMIA) 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: LMR 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 with LMIA, because none of the 700+ hedge funds tracked by Insider Monkey identified LMIA 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 LMI Aerospace, Inc. (NASDAQ:LMIA) but similarly valued. We will take a look at Abraxas Petroleum Corp. (NASDAQ:AXAS), Pioneer Energy Services Corp (NYSE:PES), Dynamic Materials Corporation (NASDAQ:BOOM), and AcelRx Pharmaceuticals Inc (NASDAQ:ACRX). This group of stocks’ market values are similar to LMIA’s market value.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $33 million in LMIA’s case, the highest among its peers. Pioneer Energy Services Corp (NYSE:PES) is the most popular stock in this table. On the other hand Dynamic Materials Corporation (NASDAQ:BOOM) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks LMI Aerospace, Inc. (NASDAQ:LMIA) is even less popular than BOOM. 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.