Is KongZhong Corporation(ADR) (KZ) Going to Burn These Hedge Funds?

Because KongZhong Corporation(ADR) (NASDAQ:KZ) has experienced bearish sentiment from the smart money, logic holds that there exists a select few funds that slashed their entire stakes in the third quarter. It’s worth mentioning that Frank Slattery’s Symmetry Peak Management dumped the biggest position of the 700 funds watched by Insider Monkey, totaling about $3.1 million in call options. Frank Slattery’s fund, Symmetry Peak Management, also dumped its call options, about $1.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as KongZhong Corporation(ADR) (NASDAQ:KZ) but similarly valued. These stocks are Era Group Inc (NYSE:ERA), Adamas Pharmaceuticals Inc (NASDAQ:ADMS), C1 Financial Inc (NYSE:BNK), and Boingo Wireless Inc (NASDAQ:WIFI). This group of stocks’ market values are closest to KZ’s market value.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $6 million in KZ’s case. Boingo Wireless Inc (NASDAQ:WIFI) is the most popular stock in this table. On the other hand C1 Financial Inc (NYSE:BNK) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks KongZhong Corporation(ADR) (NASDAQ:KZ) is as less popular as BNK. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, 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.