Is Ophthotech Corp (OPHT) A Good Stock To Buy?

Judging by the fact that Ophthotech Corp (NASDAQ:OPHT) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of hedge funds that slashed their full holdings by the end of the third quarter. At the top of the heap, Jonathan Lourie and Stuart Fiertz’s Cheyne Capital sold off the biggest position of the “upper crust” of funds followed by Insider Monkey, totaling close to $3.7 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also dumped its stock, about $1 million worth of. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 fund by the end of the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Ophthotech Corp (NASDAQ:OPHT) but similarly valued. These stocks are Mpg Office Trust Inc (NYSE:MPG), Gamco Investors Inc. (NYSE:GBL), ITI Inc (NASDAQ:ITCI), and Great Western Bancorp Inc (NYSE:GWB). This group of stocks’ market values resemble OPHT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MPG 11 100640 3
GBL 11 27425 2
ITCI 26 320207 12
GWB 24 274365 10

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $181 million. That figure was $270 million in OPHT’s case, which is a good sign. ITI Inc (NASDAQ:ITCI) is the most popular stock in this table, while Mpg Office Trust Inc (NYSE:MPG) and Gamco Investors Inc. (NYSE:GBL) are the least popular ones with only 11 bullish hedge fund positions each. Ophthotech Corp (NASDAQ:OPHT) 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 ITCI might be a better candidate to consider a long position.