Imprivata Inc (IMPR) Losing Some Popularity Among Top Investors

Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Imprivata Inc (NYSE:IMPR).

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Is Imprivata Inc (NYSE:IMPR) an outstanding investment right now? The smart money is reducing their bets on the stock. The number of long hedge fund positions stayed the same, which is a slightly negative development in our experience. Imprivata Inc (NYSE:IMPR) was in 15 hedge funds’ portfolios at the end of September. There were 15 hedge funds in our database with Imprivata Inc (NYSE:IMPR) holdings at the end of the previous quarter. 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 Applied Micro Circuits Corporation (NASDAQ:AMCC), AG Mortgage Investment Trust Inc (NYSE:MITT), and LivePerson, Inc. (NASDAQ:LPSN) to gather more data points.

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To the average investor there are several formulas market participants put to use to value their holdings. Two of the less known formulas are hedge fund and insider trading moves. our experts have shown that, historically, those who follow the best picks of the elite fund managers can trounce the market by a significant amount (see the details here).

With all of this in mind, let’s analyze the recent action regarding Imprivata Inc (NYSE:IMPR).

How are hedge funds trading Imprivata Inc (NYSE:IMPR)?

At the end of Q3, a total of 15 of the hedge funds tracked by Insider Monkey were bullish in this stock, flat over the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Justin John Ferayorni’s Tamarack Capital Management has the most valuable position in Imprivata Inc (NYSE:IMPR), worth close to $25.3 million, amounting to 3% of its total 13F portfolio. On Tamarack Capital Management’s heels is Deerfield Management, managed by James E. Flynn, which holds a $20.5 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions encompass Michael Murphy and Daniel Donoghue’s Discovery Group, James Dondero’s Highland Capital Management, and Jim Simons’ Renaissance Technologies.

Since Imprivata Inc (NYSE:IMPR) has experienced declining sentiment from the smart money, it’s easy to see that there was a specific group of hedgies that slashed their entire stakes last quarter. Intriguingly, Brian Taylor’s Pine River Capital Management cut the largest investment of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $6.8 million in stock, while Frank Slattery of Symmetry Peak Management was right behind this move, as the hedgie dropped about $1.6 million worth of shares. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Imprivata Inc (NYSE:IMPR) but similarly valued. We will take a look at Applied Micro Circuits Corporation (NASDAQ:AMCC), AG Mortgage Investment Trust Inc (NYSE:MITT), LivePerson, Inc. (NASDAQ:LPSN), and FutureFuel Corp. (NYSE:FF). This group of stocks’ market valuations are similar to Imprivata Inc (NYSE:IMPR)’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AMCC 11 70371 -3
MITT 7 17131 1
LPSN 18 83021 4
FF 13 31873 -1

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 $51 million. That figure was $98 million in Imprivata Inc (NYSE:IMPR)’s case. LivePerson, Inc. (NASDAQ:LPSN) is the most popular stock in this table. On the other hand, AG Mortgage Investment Trust Inc (NYSE:MITT) is the least popular one with only seven bullish hedge fund positions. Imprivata Inc (NYSE:IMPR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are moving into aggressively. In this regard LivePerson, Inc. (NASDAQ:LPSN) might be a better candidate to consider a long position in.