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Hedge Funds Bought a Lot of Corium International Inc (CORI) on Q3 Weakness

We can judge whether Corium International Inc (NASDAQ:CORI) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, research shows that these picks historically outperformed the market when we factor in known risk factors.

Is Corium International Inc (NASDAQ:CORI) a good investment? Smart money certainly grew more confident in the stock during the third quarter, even as shares fell by over 30%. CORI was in 6 hedge funds’ portfolios at the end of the third quarter, up from just 2 hedge funds in our database with CORI positions at the end of the second quarter. The value of their aggregate holdings also rose slightly, despite the huge drop in the stock. At the end of this article we will also compare CORI to other stocks including Townsquare Media Inc (NYSE:TSQ), Dicerna Pharmaceuticals Inc (NASDAQ:DRNA), and Fibrocell Science Inc (NASDAQ:FCSC) to get a better sense of its popularity.

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At the moment there are several formulas shareholders use to size up publicly traded companies. A duo of the most underrated formulas are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the top fund managers can beat their index-focused peers by a healthy amount (see the details here).

With all of this in mind, let’s take a look at the recent action encompassing Corium International Inc (NASDAQ:CORI).

What have hedge funds been doing with Corium International Inc (NASDAQ:CORI)?

At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a  200% jump from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes considerably (or had already accumulated large positions).

According to Insider Monkey’s hedge fund database, Broadfin Capital, managed by Kevin Kotler, holds the number one position in Corium International Inc (NASDAQ:CORI). Broadfin Capital has a $16.9 million position in the stock, comprising 0.9% of its 13F portfolio. On Broadfin Capital’s heels is Justin John Ferayorni of Tamarack Capital Management, with a $12.4 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism comprise Paul Marshall and Ian Wace’s Marshall Wace LLP, Ken Greenberg and David Kim’s Ghost Tree Capital, and Israel Englander’s Millennium Management.

Consequently, key hedge funds have jumped into Corium International Inc (NASDAQ:CORI) headfirst. Marshall Wace LLP initiated the biggest position in Corium International Inc (NASDAQ:CORI); the fund had $1.6 million invested in the company at the end of the quarter. Ghost Tree Capital also made a $1.2 million investment in the stock during the quarter. The following funds were also among the new CORI investors: Millennium Management, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Corium International Inc (NASDAQ:CORI) but similarly valued. These stocks are Townsquare Media Inc (NYSE:TSQ), Dicerna Pharmaceuticals Inc (NASDAQ:DRNA), Fibrocell Science Inc (NASDAQ:FCSC), and TriplePoint Venture Growth BDC Corp (NYSE:TPVG). This group of stocks’ market values resemble CORI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TSQ 10 52936 -1
DRNA 9 30232 -3
FCSC 4 15528 1
TPVG 6 10796 2

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 $27 million. That figure was $33 million in CORI’s case. Townsquare Media Inc (NYSE:TSQ) is the most popular stock in this table. On the other hand Fibrocell Science Inc (NASDAQ:FCSC) is the least popular one with only 4 bullish hedge fund positions. Corium International Inc (NASDAQ:CORI) 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 TSQ might be a better candidate to consider for a long position, although the bullish action on CORI during the quarter is certainly intriguing.

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