Is Emmis Communications Corporation (EMMS) A Good Stock To Buy?

Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Is Emmis Communications Corporation (NASDAQ:EMMS) a great investment right now? The smart money is becoming more confident. The number of bullish hedge fund bets increased by 1 recently. EMMS was in 4 hedge funds’ portfolios at the end of September. There were 3 hedge funds in our database with EMMS 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 UCP Inc (NYSE:UCP), Hutchinson Technology Incorporated (NASDAQ:HTCH), and iCAD Inc (NASDAQ:ICAD) to gather more data points.

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What have hedge funds been doing with Emmis Communications Corporation (NASDAQ:EMMS)?

At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund holdings data compiled by Insider Monkey, Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, holds the biggest position in Emmis Communications Corporation (NASDAQ:EMMS). Nantahala Capital Management has a $1.4 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, led by Jim Simons, holding a $0.7 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism comprise Mario Gabelli’s GAMCO Investors, Ken Griffin’s Citadel Investment Group and .

As one would reasonably expect, key hedge funds were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, assembled the largest position in Emmis Communications Corporation (NASDAQ:EMMS). Citadel Investment Group had $0 million invested in the company at the end of the quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Emmis Communications Corporation (NASDAQ:EMMS) but similarly valued. These stocks are UCP Inc (NYSE:UCP), Hutchinson Technology Incorporated (NASDAQ:HTCH), iCAD Inc (NASDAQ:ICAD), and Galectin Therapeutics Inc. (NASDAQ:GALT). All of these stocks’ market caps are similar to EMMS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UCP 5 13107 0
HTCH 6 3601 -2
ICAD 4 2015 -2
GALT 4 1677 -2

As you can see these stocks had an average of 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $5 million.That figure was $2 million in EMMS’s case. Hutchinson Technology Incorporated (NASDAQ:HTCH) is the most popular stock in this table. On the other hand iCAD Inc (NASDAQ:ICAD) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Emmis Communications Corporation (NASDAQ:EMMS) is at the bottom of the range. Considering that hedge funds aren’t fond of this stock, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.