It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 5.2% in the 12 month-period that ended October 30, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular S&P 500 stocks among the hedge fund investors tracked by the Insider Monkey team returned 9.5% over the same period, which provides evidence that these money managers do have great stock picking abilities. Even more to that, 63% of these stocks managed to beat the S&P 500 Index. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Evoke Pharma Inc (NASDAQ:EVOK).
Is Evoke Pharma Inc (NASDAQ:EVOK) worth your attention right now? The best stock pickers are getting more bullish. The number of long hedge fund positions moved up by 1 recently. Evoke Pharma Inc (NASDAQ:EVOK) was in 4 hedge funds’ portfolios at the end of the third quarter of 2015. There were 3 hedge funds in our database with Evoke Pharma Inc (NASDAQ:EVOK) positions at the end of the previous quarter. At the end of this article, we will also compare Evoke Pharma Inc (NASDAQ:EVOK) to other stocks, including ImmuCell Corporation (NASDAQ:ICCC), Swift Energy Company (NYSE:SFY), and Noranda Aluminum Holding Corporation (NYSE:NOR) to get a better sense of its popularity.
If you’d ask most traders, hedge funds are seen as slow, old financial vehicles of yesteryear. While there are over 8000 funds with their doors open at present, We choose to focus on the masters of this group, about 700 funds. Most estimates calculate that this group of people preside over the lion’s share of the smart money’s total asset base, and by watching their inimitable picks, Insider Monkey has found various investment strategies that have historically outpaced the broader indices. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points annually for a decade in their back tests.
With all of this in mind, let’s take a peek at the recent action surrounding Evoke Pharma Inc (NASDAQ:EVOK).
Hedge fund activity in Evoke Pharma Inc (NASDAQ:EVOK)
At the end of September, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 33% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, James A. Silverman’s Opaleye Management has the number one position in Evoke Pharma Inc (NASDAQ:EVOK), worth close to $0.8 million, accounting for 0.4% of its total 13F portfolio. The second largest stake is held by Knoll Capital Management, managed by Fred Knoll, which holds a $0.2 million position; 0.1% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish comprise Israel Englander’s Millennium Management, and Renaissance Technologies.
As aggregate interest increased, some big names have jumped into Evoke Pharma Inc (NASDAQ:EVOK) headfirst. Millennium Management initiated the largest position in Evoke Pharma Inc (NASDAQ:EVOK). Millennium Management had $0.2 million invested in the company at the end of the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Evoke Pharma Inc (NASDAQ:EVOK) but similarly valued. We will take a look at ImmuCell Corporation (NASDAQ:ICCC), Swift Energy Company (NYSE:SFY), Noranda Aluminum Holding Corporation (NYSE:NOR), and Ritter Pharmaceuticals Inc (NASDAQ:RTTR). This group of stocks’ market caps matches Evoke Pharma Inc (NASDAQ:EVOK)’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see, these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $1 million in Evoke Pharma Inc (NASDAQ:EVOK)’s case. Noranda Aluminum Holding Corporation (NYSE:NOR) is the most popular stock in this table. On the other hand, ImmuCell Corporation (NASDAQ:ICCC) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks, Evoke Pharma Inc (NASDAQ:EVOK) is even less popular than ImmuCell Corporation (NASDAQ:ICCC). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.