We view hedge fund activity in the stock as being unfavorable, but in this case there was only a single hedge fund selling its entire position: LMR Partners. 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 here, because only one of the 700+ hedge funds tracked by Insider Monkey identified the stock as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Profire Energy, Inc. (NASDAQ:PFIE) but similarly valued. These stocks are LeapFrog Enterprises, Inc. (NYSE:LF), Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP), SFX Entertainment Inc (NASDAQ:SFXE), and Orion Energy Systems, Inc. (NASDAQ:OESX). All of these stocks’ market caps resemble PFIE’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 9 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $3 million in PFIE’s case. LeapFrog Enterprises, Inc. (NYSE:LF) is the most popular stock in this table. On the other hand Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP) is the least popular one with only 4 bullish hedge fund positions. Profire Energy, Inc. (NASDAQ:PFIE) 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 LF or SFXE might be better candidates to consider a long position in.