Is Stemline Therapeutics Inc (STML) a Good Stock to Buy?

Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

Is Stemline Therapeutics Inc (NASDAQ:STML) worth your attention right now? Money managers are definitely in a bullish mood. The number of long hedge fund positions that are disclosed in regulatory 13F filings swelled by 3 recently. STML was in 11 hedge funds’ portfolios at the end of September. There were 8 hedge funds in our database with STML positions at the end of the previous quarter. At the end of this article we will also compare STML to other stocks including Medgenics Inc (NYSEMKT:MDGN), Evolution Petroleum Corporation (NYSEAMEX:EPM), and Newtek Business Services, Inc (NASDAQ:NEWT) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Hedge fund activity in Stemline Therapeutics Inc (NASDAQ:STML)

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, up by 38% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in STML over the last 5 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Baker Bros. Advisors, led by Julian Baker and Felix Baker, holds the biggest position in Stemline Therapeutics Inc (NASDAQ:STML). Baker Bros. Advisors has a $3.6 million position in the stock. The second largest stake is held by Principal Global Investors of Columbus Circle Investors, with a $1.6 million position. Other professional money managers with similar optimism encompass Anders Hove and Bong Koh’s VHCP Management, Hal Mintz’s Sabby Capital and Thomas Bailard’s Bailard Inc. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Columbus Circle Investors assembled the most outsized position in Stemline Therapeutics Inc (NASDAQ:STML). Sabby Capital also made a $1.1 million investment in the stock during the quarter. The other fund with new positions in the stock is Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s check out hedge fund activity in other stocks similar to Stemline Therapeutics Inc (NASDAQ:STML). These stocks are Medgenics Inc (NYSEMKT:MDGN), Evolution Petroleum Corporation (NYSEAMEX:EPM), Newtek Business Services, Inc (NASDAQ:NEWT), and West Marine, Inc. (NASDAQ:WMAR). This group of stocks’ market values are closest to STML’s market value.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $11 million in STML’s case. Medgenics Inc (NYSEMKT:MDGN) is the most popular stock in this table. On the other hand Evolution Petroleum Corporation (NYSEAMEX:EPM) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Stemline Therapeutics Inc (NASDAQ:STML) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None