Should You Avoid Demandware Inc (DWRE)?

Since Demandware Inc (NYSE:DWRE) has faced falling interest from the aggregate hedge fund industry, logic holds that there were a few funds who sold off their full holdings heading into Q4. At the top of the heap, Vivek Mehta and Aaron Husock’s ShearLink Capital dumped the largest stake of the 700 funds followed by Insider Monkey, comprising close to $12.5 million in stock. Louis Bacon’s fund, Moore Global Investments, also said goodbye to its stock, about $6 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 3 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Demandware Inc (NYSE:DWRE) but similarly valued. We will take a look at The Advisory Board Company (NASDAQ:ABCO), SemGroup Corp (NYSE:SEMG), Patterson-UTI Energy, Inc. (NASDAQ:PTEN), and Sterling Bancorp (NYSE:STL). This group of stocks’ market values resemble DWRE’s market value.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $286 million, compared to $70 million in DWRE’s case. SemGroup Corp (NYSE:SEMG) is the most popular stock in this table. On the other hand The Advisory Board Company (NASDAQ:ABCO) is the least popular one with only 11 bullish hedge fund positions. Demandware Inc (NYSE:DWRE) 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 SEMG might be a better candidate to consider a long position.