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Should You Avoid Mattson Technology, Inc. (MTSN)?

Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third most popular stock, lost 10% amid uncertainty regarding the interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Is Mattson Technology, Inc. (NASDAQ:MTSN) a buy, sell, or hold? The stock lost 18.18% of its value during the third quarter, and we discovered a similar sentiment among the hedge funds. The number of bullish hedge fund bets retreated by 9 recently. Considering the drop in hedge fund interest, we decided to take a sneak peek into the hedge funds holding Mattson Technology, Inc. (NASDAQ:MTSN) in their portfolio.

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 FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW), TESSCO Technologies, Inc. (NASDAQ:TESS), and Cidara Therapeutics Inc (NASDAQ:CDTX) to gather more data points.

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In the 21st century investor’s toolkit, there are a large number of indicators shareholders employ to appraise publicly traded companies. A pair of the most innovative indicators are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the best money managers can outclass the market by a significant amount (see the details here).

Keeping this in mind, let’s take a glance at the recent action surrounding Mattson Technology, Inc. (NASDAQ:MTSN).

What does the smart money think about Mattson Technology, Inc. (NASDAQ:MTSN)?

Heading into Q4, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 53% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Rima Senvest Management, managed by Richard Mashaal, holds the most valuable position in Mattson Technology, Inc. (NASDAQ:MTSN). Rima Senvest Management has a $4.5 million position in the stock, comprising 0.3% of its 13F portfolio. The second most bullish fund manager is Royce & Associates, which holds a $4 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other peers that are bullish comprise Cliff Asness’ AQR Capital Management, Peter Keane’s Keane Capital Management, and D E Shaw.

Due to the fact that Mattson Technology, Inc. (NASDAQ:MTSN) has faced a declination in interest from the smart money, logic holds that there were a few hedgies that elected to cut their entire stakes heading into Q4. It’s worth mentioning that Israel Englander’s Millennium Management dropped the largest investment of all the hedgies monitored by Insider Monkey, worth an estimated $0.8 million in stock. Andy Redleaf’s fund, Whitebox Advisors, also dropped its stock, about $0.6 million worth of shares. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 9 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks similar to Mattson Technology, Inc. (NASDAQ:MTSN). These stocks are FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW), TESSCO Technologies, Inc. (NASDAQ:TESS), Cidara Therapeutics Inc (NASDAQ:CDTX), and Inventure Foods Inc (NASDAQ:SNAK). This group of stocks’ market caps are similar to Mattson Technology, Inc. (NASDAQ:MTSN)’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FFNW 6 11117 1
TESS 6 26752 2
CDTX 10 52581 1
SNAK 6 11759 -4

As you can see, these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $11 million in Mattson Technology, Inc. (NASDAQ:MTSN)’s case. Cidara Therapeutics Inc (NASDAQ:CDTX) is the most popular stock in this table. On the other hand, FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW) is the least popular one with only 6 bullish hedge fund positions. Mattson Technology, Inc. (NASDAQ:MTSN) 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, Cidara Therapeutics Inc (NASDAQ:CDTX) might be a better candidate to consider a long position.

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