Is Universal Stainless & Alloy Products (USAP) Going To Burn These Hedge Funds?

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We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Two Sigma Advisors. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 700+ hedge funds tracked by Insider Monkey identified USAP as a viable investment and initiated a position in the stock.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Universal Stainless & Alloy Products (NASDAQ:USAP) but similarly valued. These stocks are Life Technologies Corp. (NASDAQ:LIFE), UniPixel Inc (NASDAQ:UNXL), Sito Mobile Ltd (NASDAQ:SITO), and Galena Biopharma Inc (NASDAQ:GALE). This group of stocks’ market valuations match USAP’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LIFE 6 6408 1
UNXL 4 722 0
SITO 5 2871 5
GALE 7 687 1

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $11 million in USAP’s case. Galena Biopharma Inc (NASDAQ:GALE) is the most popular stock in this table. On the other hand UniPixel Inc (NASDAQ:UNXL) is the least popular one with only 4 bullish hedge fund positions. Universal Stainless & Alloy Products (NASDAQ:USAP) 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 GALE might be a better candidate to consider taking a long position in.

Disclosure: None

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