How Do Hedge Funds Feel About ProShares UltraShort Nasdaq Biotech (BIS)?

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Beech Hill Partners. 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 none of the 700+ hedge funds tracked by Insider Monkey identified BIS as a viable investment and initiated a position in the stock.

Let’s go over hedge fund activity in other stocks similar to ProShares UltraShort Nasdaq Biotech (NASDAQ:BIS). We will take a look at Monroe Capital Corp (NASDAQ:MRCC), Aspen Aerogels Inc (NYSE:ASPN), Maxwell Technologies Inc. (NASDAQ:MXWL), and HORSEHEAD HOLDING CORP. (NASDAQ:ZINC). This group of stocks’ market values are closest to BIS’s market value.

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 $18 million. At the same time, hedge funds amassed $31 million worth of ProShares UltraShort Nasdaq Biotech (NASDAQ:BIS)’s shares at the end of September, but the number of funds holding shares is below average. This does not necessarily mean that BIS is not a good stock to buy and a more detailed analysis might reveal that it has some potential to gain ground. However, based on our extensive studies, we consider that the best approach is to focus on analyzing stocks that hedge funds are collectively the most fond of and, in this casse, HORSEHEAD HOLDING CORP. (NASDAQ:ZINC) may be a better alternative.