Is MELA Sciences Inc (MELA) A Good Stock To Buy?

Is MELA Sciences Inc (NASDAQ:MELA) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

MELA Sciences Inc (NASDAQ:MELA) has experienced a decrease in hedge fund sentiment of late. MELA was in 4 hedge funds’ portfolios at the end of September. There were 5 hedge funds in our database with MELA holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Wave Systems Corp. (NASDAQ:WAVX), Essex Rental Corp. (NASDAQ:ESSX), and Hooper Holmes, Inc. (NYSEMKT:HH) to gather more data points.

Keeping this in mind, we’re going to analyze the recent action encompassing MELA Sciences Inc (NASDAQ:MELA).

What have hedge funds been doing with MELA Sciences Inc (NASDAQ:MELA)?

At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the second quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Broadfin Capital, managed by Kevin Kotler, holds the number one position in MELA Sciences Inc (NASDAQ:MELA). Broadfin Capital has a $1.5 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Hal Mintz of Sabby Capital, with a $0.8 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Other members of the smart money with similar optimism contain Ken Griffin’s Citadel Investment Group, Paul Orlin and Alex Porter’s Amici Capital.