Is SL Industries, Inc. (SLI) A Good Stock To Buy?

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: PDT 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 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 also examine hedge fund activity in other stocks – not necessarily in the same industry as SL Industries, Inc. (NYSEAMEX:SLI) but similarly valued. We will take a look at Violin Memory Inc (NYSE:VMEM), Collectors Universe, Inc. (NASDAQ:CLCT), Dixie Group Inc (NASDAQ:DXYN), and Unilife Corp (NASDAQ:UNIS). This group of stocks’ market valuations are closest to SLI’s market valuation.

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $11 million, significantly lower than $47 million in SLI’s case. Violin Memory Inc (NYSE:VMEM) is the most popular stock in this table, while Unilife Corp (NASDAQ:UNIS) is the least popular one with only 4 bullish hedge fund positions. SL Industries, Inc. (NYSEAMEX:SLI) 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 VMEM might be a better candidate to take a closer look at.