The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards Protalix BioTherapeutics Inc. (NYSEMKT:PLX), and what that likely means for the prospects of the company and its stock.
Protalix BioTherapeutics Inc. (NYSEMKT:PLX) investors should be aware of a decrease in support from the world’s most elite money managers of late. Protalix BioTherapeutics Inc. (NYSEMKT:PLX) was in 5 hedge funds’ portfolios at the end of September. There were 7 hedge funds in our database with Protalix BioTherapeutics Inc. (NYSEMKT:PLX) 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 Recro Pharma Inc (NASDAQ:REPH), American Capital Senior Floating Ltd (NASDAQ:ACSF), and Community Financial Corp (NASDAQ:TCFC) to gather more data points.
In the 21st century investor’s toolkit, there are plenty of indicators stock traders can use to analyze their holdings. Two of the most innovative indicators are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the top money managers can outpace their index-focused peers by a very impressive amount (see the details here).
Now, we’re going to take a gander at the key action regarding Protalix BioTherapeutics Inc. (NYSEMKT:PLX).
What does the smart money think about Protalix BioTherapeutics Inc. (NYSEMKT:PLX)?
At the end of September, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 29% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Camber Capital Management, managed by Stephen DuBois, holds the biggest position in Protalix BioTherapeutics Inc. (NYSEMKT:PLX). Camber Capital Management has an $8.6 million position in the stock, comprising 0.7% of its 13F portfolio. The second largest stake is held by Opaleye Management, managed by James A. Silverman, which holds a $4.3 million position; 2.1% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions comprise Jacob Gottlieb’s Visium Asset Management, Nathan Fischel’s DAFNA Capital Management, and Ken Griffin’s Citadel Investment Group.
Judging by the fact that Protalix BioTherapeutics Inc. (NYSEMKT:PLX) has faced a bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of fund managers that slashed their positions entirely by the end of the third quarter. At the top of the heap, Chao Ku’s Nine Chapters Capital Management said goodbye to the biggest position of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $0.1 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also sold off its stock, about $20,000 worth of shares. These moves are important to note, as total hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Protalix BioTherapeutics Inc. (NYSEMKT:PLX) but similarly valued. We will take a look at Recro Pharma Inc (NASDAQ:REPH), American Capital Senior Floating Ltd (NASDAQ:ACSF), Community Financial Corp (NASDAQ:TCFC), and Neothetics Inc (NASDAQ:NEOT). All of these stocks’ market caps are similar to Protalix BioTherapeutics Inc. (NYSEMKT:PLX)’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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 $18 million. That figure was $17 million in Protalix BioTherapeutics Inc. (NYSEMKT:PLX)’s case. Recro Pharma Inc (NASDAQ:REPH) is the most popular stock in this table. On the other hand, American Capital Senior Floating Ltd (NASDAQ:ACSF) is the least popular one with only 4 bullish hedge fund positions. Protalix BioTherapeutics Inc. (NYSEAMEX:PLX) 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, Recro Pharma Inc (NASDAQ:REPH) might be a better candidate to consider a long position.