Is Ignyta Inc (RXDX) A Good Stock To Buy?

Seeing as Ignyta Inc (NASDAQ:RXDX) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few hedge funds that decided to sell off their positions entirely by the end of the third quarter. Intriguingly, Thomas Bailard’s Bailard Inc dumped the biggest investment of all the hedgies tracked by Insider Monkey, comprising an estimated $1.5 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund said goodbye to about $1.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 6 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Ignyta Inc (NASDAQ:RXDX) but similarly valued. These stocks are Hovnanian Enterprises, Inc. (NYSE:HOV), Cytokinetics, Inc. (NASDAQ:CYTK), PowerSecure International, Inc. (NYSE:POWR), and Cohu, Inc. (NASDAQ:COHU). This group of stocks’ market valuations are closest to RXDX’s market valuation.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $29 million, lower than the $80 million in RXDX’s case. Cytokinetics, Inc. (NASDAQ:CYTK) is the most popular stock in this table. On the other hand PowerSecure International, Inc. (NYSE:POWR) is the least popular one with only 10 bullish hedge fund positions. Ignyta Inc (NASDAQ:RXDX) 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 CYTK might be a better candidate to consider a long position.