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Hedge Funds Cautiously Watching PLx Pharma Inc. (PLXP)

In this article you are going to find out whether hedge funds think PLx Pharma Inc. (NASDAQ:PLXP) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Hedge fund interest in PLx Pharma Inc. (NASDAQ:PLXP) 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 U.S. Well Services, Inc. (NASDAQ:USWS), Rubicon Technology, Inc. (NASDAQ:RBCN), and Luby’s, Inc. (NYSE:LUB) to gather more data points. Our calculations also showed that PLXP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the 21st century investor’s toolkit there are tons of formulas shareholders have at their disposal to size up publicly traded companies. Two of the best formulas are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the elite investment managers can beat the S&P 500 by a superb amount (see the details here).

Xiniya Earnings Call Transcript XNY 2014 Q3

New York Stock Exchange

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a peek at the new hedge fund action surrounding PLx Pharma Inc. (NASDAQ:PLXP).

How have hedgies been trading PLx Pharma Inc. (NASDAQ:PLXP)?

At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2019. On the other hand, there were a total of 3 hedge funds with a bullish position in PLXP a year ago. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Peter S. Park’s Park West Asset Management has the biggest position in PLx Pharma Inc. (NASDAQ:PLXP), worth close to $3.3 million, amounting to 0.2% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, holding a $0.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions encompass Israel Englander’s Millennium Management, Bradley Louis Radoff’s Fondren Management and . In terms of the portfolio weights assigned to each position Park West Asset Management allocated the biggest weight to PLx Pharma Inc. (NASDAQ:PLXP), around 0.23% of its 13F portfolio. Fondren Management is also relatively very bullish on the stock, earmarking 0.06 percent of its 13F equity portfolio to PLXP.

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 go over hedge fund activity in other stocks similar to PLx Pharma Inc. (NASDAQ:PLXP). We will take a look at U.S. Well Services, Inc. (NASDAQ:USWS), Rubicon Technology, Inc. (NASDAQ:RBCN), Luby’s, Inc. (NYSE:LUB), and Wireless Telecom Group, Inc. (NYSE:WTT). This group of stocks’ market caps resemble PLXP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
USWS 8 1057 -2
RBCN 3 3438 0
LUB 3 2388 0
WTT 2 991 0
Average 4 1969 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $4 million in PLXP’s case. U.S. Well Services, Inc. (NASDAQ:USWS) is the most popular stock in this table. On the other hand Wireless Telecom Group, Inc. (NYSE:WTT) is the least popular one with only 2 bullish hedge fund positions. PLx Pharma Inc. (NASDAQ:PLXP) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on PLXP as the stock returned 65.8% during the second quarter and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.

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