Derma Sciences Inc (DSCI): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

Derma Sciences Inc (NASDAQ:DSCI) has experienced an increase in hedge fund interest of late.

At the moment, there are a multitude of indicators investors can use to watch their holdings. Some of the best are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best hedge fund managers can outpace their index-focused peers by a solid margin (see just how much).

Peter KolchinskyEqually as integral, positive insider trading sentiment is another way to break down the financial markets. There are a variety of stimuli for a bullish insider to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Several empirical studies have demonstrated the useful potential of this tactic if investors understand what to do (learn more here).

Now, let’s take a glance at the key action regarding Derma Sciences Inc (NASDAQ:DSCI).

What does the smart money think about Derma Sciences Inc (NASDAQ:DSCI)?

At the end of the fourth quarter, a total of 6 of the hedge funds we track held long positions in this stock, a change of 50% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings significantly.

According to our comprehensive database, Peter Kolchinsky’s RA Capital Management had the largest position in Derma Sciences Inc (NASDAQ:DSCI), worth close to $17.5 million, accounting for 6.2% of its total 13F portfolio. The second largest stake is held by Baker Bros. Advisors, managed by Julian Baker and Felix Baker, which held a $15.1 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include Kevin Kotler’s Broadfin Capital, Samuel Isaly’s OrbiMed Advisors and Nathan Fischel’s DAFNA Capital Management.

As aggregate interest increased, specific money managers have jumped into Derma Sciences Inc (NASDAQ:DSCI) headfirst. OrbiMed Advisors, managed by Samuel Isaly, established the most outsized position in Derma Sciences Inc (NASDAQ:DSCI). OrbiMed Advisors had 3.6 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also made a $0.2 million investment in the stock during the quarter.

What do corporate executives and insiders think about Derma Sciences Inc (NASDAQ:DSCI)?

Bullish insider trading is particularly usable when the primary stock in question has seen transactions within the past 180 days. Over the last six-month time period, Derma Sciences Inc (NASDAQ:DSCI) has seen zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

EDITOR’S NOTE: Insider Monkey received the following note from DSCI, revealing that there’s “a misleading progression of holdings by insider William Martin and makes it look as if he’s lightening up, when this isn’t the case […] the recent sale of stock was a cashless exercise of warrants.”

Let’s go over hedge fund and insider activity in other stocks similar to Derma Sciences Inc (NASDAQ:DSCI). These stocks are Rochester Medical Corporation (NASDAQ:ROCM), Mesa Laboratories, Inc. (NASDAQ:MLAB), Harvard Bioscience, Inc. (NASDAQ:HBIO), AtriCure Inc. (NASDAQ:ATRC), and IMRIS Inc – Ord Shs (NASDAQ:IMRS). This group of stocks are in the medical instruments & supplies industry and their market caps are similar to DSCI’s market cap.