At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Conatus Pharmaceuticals Inc (NASDAQ:CNAT) has experienced an increase in hedge fund interest lately. There were 4 hedge funds in our database with CNAT positions at the end of the previous quarter. 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 CEL-SCI Corporation (NYSEMKT:CVM), Universal Technical Institute, Inc. (NYSE:UTI), and JRjr33 Inc (NYSEMKT:JRJR) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Keeping this in mind, let’s go over the fresh action surrounding Conatus Pharmaceuticals Inc (NASDAQ:CNAT).
How have hedgies been trading Conatus Pharmaceuticals Inc (NASDAQ:CNAT)?
Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 50% increase from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CNAT over the last 5 quarters. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Polar Capital, led by Brian Ashford-Russell and Tim Woolley, holds the number one position in Conatus Pharmaceuticals Inc (NASDAQ:CNAT). Polar Capital has a $0.3 million position in the stock. The second most bullish fund manager is Courage Capital, led by Richard C. Patton, holding a $0.2 million position. Remaining peers that hold long positions consist of D. E. Shaw’s D E Shaw, one of the largest hedge funds in the world, Jim Simons’ Renaissance Technologies and Ken Griffin’s Citadel Investment Group. We should note that Courage Capital is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.