Should You Buy CAS Medical Systems Inc (CASM)?

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now review hedge fund activity in other stocks similar to CAS Medical Systems Inc (NASDAQ:CASM). We will take a look at Goodrich Petroleum Corporation (NYSE:GDP), Discovery Laboratories, Inc. (NASDAQ:DSCO), Alphatec Holdings Inc (NASDAQ:ATEC), and Dover Downs Gaming & Entertainment, Inc. (NYSE:DDE). This group of stocks’ market valuations resemble CASM’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 $5 million. That figure was $8 million in CASM’s case. Goodrich Petroleum Corporation (NYSE:GDP) is the most popular stock in this table, while Alphatec Holdings Inc (NASDAQ:ATEC) is the least popular one with only 4 bullish hedge fund positions. CAS Medical Systems Inc (NASDAQ:CASM) 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 GDP might be a better candidate to consider a long position.