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Is Cardica, Inc. (CRDC) A Good Stock To Buy?

The government requires hedge funds and wealthy investors with over a certain portfolio size to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings discloses the funds’ positions on September 30. We, at Insider Monkey, have made an extensive database of more than 700 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Cardica, Inc. (NASDAQ:CRDC) based on those filings.

Cardica, Inc. (NASDAQ:CRDC) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of September. At the end of this article, we will also compare Cardica, Inc. (NASDAQ:CRDC) to other stocks, including Ampliphi Biosciences Corp (NYSEMKT:APHB), Pacific Sunwear of California, Inc. (NASDAQ:PSUN), and Paragon Offshore PLC (NYSE:PGN) to get a better sense of its popularity.

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In the financial world, there are many gauges investors use to value their stock investments. Two of the best gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the top money managers can outperform the broader indices by a very impressive margin (see the details here).

Keeping this in mind, let’s analyze the latest action encompassing Cardica, Inc. (NASDAQ:CRDC).

What does the smart money think about Cardica, Inc. (NASDAQ:CRDC)?

At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, flat over the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Stephen DuBois’ Camber Capital Management has the most valuable position in Cardica, Inc. (NASDAQ:CRDC), worth close to $2.4 million, comprising 0.2% of its total 13F portfolio. The second most bullish fund manager is Broadfin Capital, led by Kevin Kotler, holding a $2.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Hedge funds and other institutional investors that are bullish contain Hal Mintz’s Sabby Capital, Phil Frohlich’s Prescott Group Capital Management and Nathan Fischel’s DAFNA Capital Management.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Cardica, Inc. (NASDAQ:CRDC) but similarly valued. These stocks are Ampliphi Biosciences Corp (NYSEMKT:APHB), Pacific Sunwear of California, Inc. (NASDAQ:PSUN), Paragon Offshore PLC (NYSE:PGN), and Amedica Corporation (NASDAQ:AMDA). All of these stocks’ market caps match Cardica, Inc. (NASDAQ:CRDC)’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
APHB 6 4244 6
PSUN 7 3350 -3
PGN 8 977 -3
AMDA 4 1252 -1

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 $8 million in Cardica, Inc. (NASDAQ:CRDC)’s case. Paragon Offshore PLC (NYSE:PGN) is the most popular stock in this table, while Amedica Corporation (NASDAQ:AMDA) is the least popular one with only 4 bullish hedge fund positions. Cardica, Inc. (NASDAQ:CRDC) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Paragon Offshore PLC (NYSE:PGN) might be a better candidate to consider a long position.

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