Is RadiSys Corporation (RSYS) 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: Balyasny Asset 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 only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Algert Coldiron Investors).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as RadiSys Corporation (NASDAQ:RSYS) but similarly valued. We will take a look at Energy XXI (Bermuda) Limited (NASDAQ:EXXI), VAALCO Energy, Inc. (NYSE:EGY), ReneSola Ltd. (ADR) (NYSE:SOL), and Neonode, Inc (NASDAQ:NEON). This group of stocks’ market valuations are closest to RSYS’s market valuation.

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 $6 million, which is lower than the $20 million figure in RSYS’s case. Energy XXI (Bermuda) Limited (NASDAQ:EXXI) is the most popular stock in this table with 14 funds holding shares. On the other hand, ReneSola Ltd. (ADR) (NYSE:SOL) is the least popular one with only 4 bullish hedge fund positions. RadiSys Corporation (NASDAQ:RSYS) 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 EXXI might be a better candidate to consider a long position.