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Petmed Express Inc (PETS): Are Hedge Funds Right About This Stock?

After several tireless days we have finished crunching the numbers from the more than 700 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Petmed Express Inc (NASDAQ:PETS).

Petmed Express Inc (NASDAQ:PETS) investors should be aware of a decrease in hedge fund sentiment lately. 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 RTI Biologics Inc. (NASDAQ:RTIX), Neovasc Inc. (NASDAQ:NVCN), and Baldwin & Lyons Inc (NASDAQ:BWINB) to gather more data points.

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To most market participants, hedge funds are viewed as slow, old financial vehicles of years past. While there are more than an 8000 funds with their doors open at the moment, Our experts choose to focus on the leaders of this group, approximately 700 funds. Most estimates calculate that this group of people command bulk of the hedge fund industry’s total asset base, and by paying attention to their top equity investments, Insider Monkey has formulated a number of investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Now, let’s take a look at the key action surrounding Petmed Express Inc (NASDAQ:PETS).

How are hedge funds trading Petmed Express Inc (NASDAQ:PETS)?

Heading into Q4, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the previous quarter. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Jim Simons’ Renaissance Technologies has the largest position in Petmed Express Inc (NASDAQ:PETS), worth close to $28.6 million, corresponding to 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, led by Chuck Royce, holding a $5.7 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that hold long positions consist of Ken Fisher’s Fisher Asset Management, Cliff Asness’s AQR Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors.

Seeing as Petmed Express Inc (NASDAQ:PETS) has faced a declination in interest from the entirety of the hedge funds we track, logic holds that there exists a select few money managers who sold off their full holdings heading into Q4. At the top of the heap, Matthew Hulsizer’s PEAK6 Capital Management dropped the biggest investment of the 700 funds watched by Insider Monkey, worth an estimated $0.6 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund said goodbye to about $0.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 1 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Petmed Express Inc (NASDAQ:PETS) but similarly valued. These stocks are RTI Biologics Inc. (NASDAQ:RTIX), Neovasc Inc. (NASDAQ:NVCN), Baldwin & Lyons Inc (NASDAQ:BWINB), and Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG). This group of stocks’ market values match PETS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RTIX 16 44325 0
NVCN 7 27280 1
BWINB 5 54221 0
DFRG 23 84739 6

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was $42 million in PETS’s case. Del Frisco’s Restaurant Group Inc (NASDAQ:DFRG) is the most popular stock in this table. On the other hand, Baldwin & Lyons Inc (NASDAQ:BWINB) is the least popular one with only 5 bullish hedge fund positions. Petmed Express Inc (NASDAQ:PETS) 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 DFRG might be a better candidate to consider a long position.

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