The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors endured a torrid quarter, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Papa Murphy’s Holdings Inc (NASDAQ:FRSH).
Papa Murphy’s Holdings Inc (NASDAQ:FRSH) was in 8 hedge funds’ portfolios at the end of the third quarter of 2015. FRSH shareholders have witnessed a decrease in hedge fund sentiment recently. There were 10 hedge funds in our database with FRSH holdings at the end of the previous quarter. At the end of this article we will also compare FRSH to other stocks, including Millennial Media, Inc. (NYSE:MM), Organovo Holdings Inc (NYSEMKT:ONVO), and Titan Machinery Inc. (NASDAQ:TITN) to get a better sense of its popularity.
At the moment there are a lot of formulas market participants can use to grade publicly traded companies. Some of the most underrated formulas are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite fund managers can beat the S&P 500 by a very impressive amount (see the details here).
With all of this in mind, we’re going to go over the recent action surrounding Papa Murphy’s Holdings Inc (NASDAQ:FRSH).
How have hedgies been trading Papa Murphy’s Holdings Inc (NASDAQ:FRSH)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Joel Ramin’s 12 West Capital Management has the largest position in Papa Murphy’s Holdings Inc (NASDAQ:FRSH), worth close to $7.3 million, amounting to 1.1% of its total 13F portfolio. Sitting at the No. 2 spot is Charles Clough’s Clough Capital Partners, with an $4.4 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism include Jim Simons’ Renaissance Technologies, Mark Broach’s Manatuck Hill Partners and Matthew Hulsizer’s PEAK6 Capital Management.
Since Papa Murphy’s Holdings Inc (NASDAQ:FRSH) has faced falling interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few money managers that slashed their positions entirely by the end of the third quarter. At the top of the heap, John Overdeck and David Siegel’s Two Sigma Advisors said goodbye to the largest investment of the “upper crust” of funds followed by Insider Monkey, totaling about $1.5 million in stock, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund sold off about $0.3 million worth. These moves are interesting, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Papa Murphy’s Holdings Inc (NASDAQ:FRSH) but similarly valued. These stocks are Millennial Media, Inc. (NYSE:MM), Organovo Holdings Inc (NYSEMKT:ONVO), Titan Machinery Inc. (NASDAQ:TITN), and Catalyst Pharmaceutical Partners, Inc. (NASDAQ:CPRX). This group of stocks’ market caps are closest to FRSH’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 12 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $17 million in FRSH’s case. Catalyst Pharmaceutical Partners, Inc. (NASDAQ:CPRX) is the most popular stock in this table, while Organovo Holdings Inc (NYSEMKT:ONVO) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Papa Murphy’s Holdings Inc (NASDAQ:FRSH) is even less popular than ONVO. 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.