With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Mitcham Industries, Inc. (NASDAQ:MIND).
Mitcham Industries, Inc. (NASDAQ:MIND) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds’ portfolios at the end of the third quarter of 2015. 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 CymaBay Therapeutics Inc (NASDAQ:CBAY), The Female Health Company (NASDAQ:FHCO), and Zhone Technologies Inc (NASDAQ:ZHNE) to gather more data points.
If you’d ask most investors, hedge funds are assumed to be worthless, old financial vehicles of years past. While there are more than an 8000 funds trading at the moment, We hone in on the moguls of this group, approximately 700 funds. It is estimated that this group of investors administer most of the smart money’s total asset base, and by shadowing their unrivaled investments, Insider Monkey has spotted numerous investment strategies that have historically exceeded the broader indices. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Now, let’s view the recent action encompassing Mitcham Industries, Inc. (NASDAQ:MIND).
How are hedge funds trading Mitcham Industries, Inc. (NASDAQ:MIND)?
At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. With the smart money’s capital changing hands, there exist a few notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Renaissance Technologies, managed by Jim Simons, holds the number one position in Mitcham Industries, Inc. (NASDAQ:MIND). Renaissance Technologies has a $0.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Matthew Hulsizer of PEAK6 Capital Management, with a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish consist of Israel Englander’s Millennium Management, John Overdeck and David Siegel’s Two Sigma Advisors and .
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: D E Shaw. 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 “Millennium Management).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Mitcham Industries, Inc. (NASDAQ:MIND) but similarly valued. These stocks are CymaBay Therapeutics Inc (NASDAQ:CBAY), The Female Health Company (NASDAQ:FHCO), Zhone Technologies Inc (NASDAQ:ZHNE), and Fuel Tech Inc. (NASDAQ:FTEK). All of these stocks’ market caps match MIND’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 $5 million. That figure was $12 million in MIND’s case. CymaBay Therapeutics Inc (NASDAQ:CBAY) is the most popular stock in this table. On the other hand The Female Health Company (NASDAQ:FHCO) is the least popular one with only 4 bullish hedge fund positions. Although, Mitcham Industries, Inc. (NASDAQ:MIND), with 5 bullish hedge fund positions, is not the least popular stock in this group, hedge fund interest is still below average. This may indicate that is not a stock worth considering, therefore, we’d rather spend our time researching stocks that hedge funds are collectively the most fond of and, in this case, CBAY may be a better alternative.