Is Violin Memory Inc (VMEM) Going to Burn These Hedge Funds?

Since Violin Memory Inc (NYSE:VMEM) has witnessed a declination in interest from the aggregate hedge fund industry, logic holds that there is a sect of fund managers that slashed their entire stakes by the end of the third quarter. Interestingly, David Lamond’s Lamond Capital Partners dumped the largest stake of the 700 funds tracked by Insider Monkey, totaling an estimated $9.6 million in stock, and Frank Brosens’s Taconic Capital was right behind this move, as the fund dumped about $2.7 million worth of shares. These moves are interesting, as aggregate hedge fund interest dropped by 4 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to Violin Memory Inc (NYSE:VMEM). We will take a look at Collectors Universe, Inc. (NASDAQ:CLCT), Dixie Group Inc (NASDAQ:DXYN), Unilife Corp (NASDAQ:UNIS), and Accuride Corporation (NYSE:ACW). This group of stocks’ market valuations are similar to VMEM’s market valuation.

As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $9 million in VMEM’s case, not a positive sign. Accuride Corporation (NYSE:ACW) is the most popular stock in this table, while Unilife Corp (NASDAQ:UNIS) is the laggard with only 4 bullish hedge fund positions. Violin Memory Inc (NYSE:VMEM) is not the most popular stock in this group, but hedge fund interest is still above average. Despite the fact that this is a slightly positive signal, we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ACW might be a better candidate to consider a long position.