Is Cyren Ltd (CYRN) A Good Stock To Buy?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Cyren Ltd (NASDAQ:CYRN).

Cyren Ltd (NASDAQ:CYRN) has seen a decrease in support from the world’s most elite money managers recently. Cyren Ltd (NASDAQ:CYRN) was in 3 hedge funds’ portfolios at the end of September. The all time high for this statistics is 4. There were 4 hedge funds in our database with CYRN holdings at the end of June. Our calculations also showed that CYRN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

RENAISSANCE TECHNOLOGIES

Jim Simons of Renaissance Technologies

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s view the recent hedge fund action encompassing Cyren Ltd (NASDAQ:CYRN).

What have hedge funds been doing with Cyren Ltd (NASDAQ:CYRN)?

Heading into the fourth quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CYRN over the last 21 quarters. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

Among these funds, Nantahala Capital Management held the most valuable stake in Cyren Ltd (NASDAQ:CYRN), which was worth $2 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $0.8 million worth of shares. Rima Senvest Management was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Nantahala Capital Management allocated the biggest weight to Cyren Ltd (NASDAQ:CYRN), around 0.06% of its 13F portfolio. Rima Senvest Management is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to CYRN.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. 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 750+ hedge funds tracked by Insider Monkey identified CYRN as a viable investment and initiated a position in the stock.

Let’s also examine hedge fund activity in other stocks similar to Cyren Ltd (NASDAQ:CYRN). We will take a look at ConforMIS, Inc. (NASDAQ:CFMS), EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT), Natural Health Trends Corp. (NASDAQ:NHTC), TETRA Technologies, Inc. (NYSE:TTI), Cortland Bancorp (NASDAQ:CLDB), HMN Financial, Inc. (NASDAQ:HMNF), and Vince Holding Corp (NYSE:VNCE). This group of stocks’ market valuations are similar to CYRN’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CFMS 7 14796 -3
EYPT 3 122 -2
NHTC 4 5579 0
TTI 12 11274 -1
CLDB 2 6881 1
HMNF 3 11876 -1
VNCE 2 1582 -3
Average 4.7 7444 -1.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.7 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $3 million in CYRN’s case. TETRA Technologies, Inc. (NYSE:TTI) is the most popular stock in this table. On the other hand Cortland Bancorp (NASDAQ:CLDB) is the least popular one with only 2 bullish hedge fund positions. Cyren Ltd (NASDAQ:CYRN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CYRN is 31.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and surpassed the market again by 15.4 percentage points. Unfortunately CYRN wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CYRN investors were disappointed as the stock returned -7.4% since the end of September (through 11/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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Disclosure: None. This article was originally published at Insider Monkey.