The third-quarter stock market correction has turned out to resemble the situation observed during the Asian financial crisis of 1997. The two relatively short-lived corrections occurred at a time with stable interest rates, falling commodity markets, with strong-performing technology and healthcare sectors, and struggling energy sector. Similarly, the two corrections followed long periods without a correction, which had to come sooner or later and it did. Even so, several prominent hedge fund investors publicly asserted their bearish view on the current state of the U.S. equity markets, suggesting that they significantly cut their exposure to equities during the latest quarter. Having said that, it would be worthwhile to take a look at the hedge fund sentiment on Cynapsus Therapeutics Inc (NASDAQ:CYNA) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Hedge fund interest in Cynapsus Therapeutics Inc (NASDAQ:CYNA) 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 Senomyx Inc. (NASDAQ:SNMX), CRA International, Inc. (NASDAQ:CRAI), and Lifetime Brands Inc (NASDAQ:LCUT) to gather more data points.
Today, there are a lot of indicators market participants use to appraise stocks. Two of the most under-the-radar indicators are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the top fund managers can beat the broader indices by a solid margin (see the details here).
Now, we’re going to take a look at the key action regarding Cynapsus Therapeutics Inc (NASDAQ:CYNA).
How are hedge funds trading Cynapsus Therapeutics Inc (NASDAQ:CYNA)?
Heading into Q4, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, flat over the second quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Dennis Purcell’s Aisling Capital has the number one position in Cynapsus Therapeutics Inc (NASDAQ:CYNA), worth close to $15.8 million, accounting for 2.8% of its total 13F portfolio. Coming in second is Adage Capital Management, led by Phill Gross and Robert Atchinson, holding a $10.5 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism contain Kevin Kotler’s Broadfin Capital, Samuel Isaly’s OrbiMed Advisors, and Anders Hove and Bong Koh’s VHCP Management.
Due to the fact that Cynapsus Therapeutics Inc (NASDAQ:CYNA) has witnessed a declining sentiment from hedge fund managers, we can see that there lies a certain “tier” of hedge funds that slashed their positions entirely in the third quarter. Interestingly, Marc Lehmann’s Riverloft Capital Management said goodbye to the biggest investment of the “upper crust” of funds tracked by Insider Monkey, valued at about $1.2 million in stock, and Anand Parekh’s Alyeska Investment Group was right behind this move, as the fund cut about $0.2 million worth of shares. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Cynapsus Therapeutics Inc (NASDAQ:CYNA). These stocks are Senomyx Inc. (NASDAQ:SNMX), CRA International, Inc. (NASDAQ:CRAI), Lifetime Brands Inc (NASDAQ:LCUT), and Medgenics Inc (NYSEMKT:MDGN). This group of stocks’ market values matches Civeo Corporation (Canada) (NYSE:CVEO)’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SNMX | 6 | 29510 | -1 |
| CRAI | 13 | 29106 | 1 |
| LCUT | 4 | 23749 | -4 |
| MDGN | 7 | 25861 | 0 |
As you can see, these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $63 million in Civeo Corporation (Canada) (NYSE:CVEO)’s case. CRA International, Inc. (NASDAQ:CRAI) is the most popular stock in this table. On the other hand, Lifetime Brands Inc (NASDAQ:LCUT) is the least popular one with only 4 bullish hedge fund positions. Cynapsus Therapeutics Inc (NASDAQ:CYNA) 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, Civeo Corporation (Canada) (NYSE:CVEO) might be a better candidate to consider a long position.
