Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards Mast Therapeutics Inc (NYSEMKT:MSTX).
Hedge fund interest in Mast Therapeutics Inc (NYSEMKT:MSTX) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Higher One Holdings, Inc (NYSE:ONE), Carbylan Therapeutics Inc (NASDAQ:CBYL), and BIND Therapeutics Inc (NASDAQ:BIND) to gather more data points.
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Keeping this in mind, we’re going to review the recent action surrounding Mast Therapeutics Inc (NYSEMKT:MSTX).
How are hedge funds trading Mast Therapeutics Inc (NYSEMKT:MSTX)?
When looking at the institutional investors followed by Insider Monkey, Biotechnology Value Fund / BVF Inc, managed by Mark Lampert, holds the largest position in Mast Therapeutics Inc (NYSEMKT:MSTX). Biotechnology Value Fund / BVF Inc has an $3 million position in the stock, comprising 0.6% of its 13F portfolio. The second largest stake is held by Baker Bros. Advisors, led by Julian Baker and Felix Baker, holding an $2.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions contain Anand Parekh’s Alyeska Investment Group, Malcolm Fairbairn’s Ascend Capital and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Renaissance Technologies. 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 Ascend Capital).
Let’s now take a look at hedge fund activity in other stocks similar to Mast Therapeutics Inc (NYSEMKT:MSTX) on the next page.