Is Fenix Parts Inc (FENX) Going to Burn These Hedge Funds?

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: LMR Partners. 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 only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Renaissance Technologies).

Let’s now review hedge fund activity in other stocks similar to Fenix Parts Inc (NASDAQ:FENX). These stocks are Pieris Pharmaceuticals Inc (NASDAQ:PIRS), Rocky Brands, Inc. (NASDAQ:RCKY), Arotech Corporation (NASDAQ:ARTX), and North American Energy Partners Inc.(USA) (NYSE:NOA). This group of stocks’ market values resemble FENX’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PIRS 6 18469 1
RCKY 4 1947 0
ARTX 3 3854 -1
NOA 5 14994 -3

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $22 million in FENX’s case. Pieris Pharmaceuticals Inc (NASDAQ:PIRS) is the most popular stock in this table. On the other hand Arotech Corporation (NASDAQ:ARTX) is the least popular one with only 3 bullish hedge fund positions. Fenix Parts Inc (NASDAQ:FENX) 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 piling on. In this regard PIRS might be a better candidate to consider taking a long position in.

Disclosure: None