We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Derma Sciences Inc (NASDAQ:DSCI).
Derma Sciences Inc (NASDAQ:DSCI) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 17 hedge funds’ portfolios at the end of September. 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 Commercial Vehicle Group, Inc. (NASDAQ:CVGI), Golden Entertainment Inc (NASDAQ:GDEN), and Upland Software Inc (NASDAQ:UPLD) to gather more data points.
Follow Derma Sciences Inc. (NASDAQ:DSCI)
Follow Derma Sciences Inc. (NASDAQ:DSCI)
With all of this in mind, let’s take a gander at the recent action encompassing Derma Sciences Inc (NASDAQ:DSCI).
What does the smart money think about Derma Sciences Inc (NASDAQ:DSCI)?
According to Insider Monkey’s hedge fund database, Julian Baker and Felix Baker’s Baker Bros. Advisors has the largest position in Derma Sciences Inc (NASDAQ:DSCI), worth close to $16.3 million, accounting for 0.2% of its total 13F portfolio. On Baker Bros. Advisors’s heels is Kevin Kotler of Broadfin Capital, with a $11.1 million position; 0.6% of its 13F portfolio is allocated to the company. Other peers that hold long positions comprise Mitchell Blutt’s Consonance Capital Management, Richard Mashaal’s Rima Senvest Management and James E. Flynn’s Deerfield Management.
Intriguingly, Warren Lammert’s Granite Point Capital dumped the biggest stake of the 700 funds tracked by Insider Monkey, comprising close to $0.4 million in stock. Ben Levine, Andrew Manuel and Stefan Renold’s fund, LMR Partners, also sold off its stock, about $0.2 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Derma Sciences Inc (NASDAQ:DSCI) but similarly valued. We will take a look at Commercial Vehicle Group, Inc. (NASDAQ:CVGI), Golden Entertainment Inc (NASDAQ:GDEN), Upland Software Inc (NASDAQ:UPLD), and Community Healthcare Trust Inc (NYSE:CHCT). This group of stocks’ market valuations resemble DSCI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CVGI | 15 | 27611 | 2 |
| GDEN | 7 | 21102 | 1 |
| UPLD | 4 | 2966 | 1 |
| CHCT | 4 | 14821 | 0 |
As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $60 million in DSCI’s case. Commercial Vehicle Group, Inc. (NASDAQ:CVGI) is the most popular stock in this table. On the other hand Upland Software Inc (NASDAQ:UPLD) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Derma Sciences Inc (NASDAQ:DSCI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
