Should You Buy General Finance Corporation (GFN)?

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as General Finance Corporation (NASDAQ:GFN) but similarly valued. We will take a look at Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX), Tremor Video Inc (NYSE:TRMR), Trillium Therapeutics Inc. (NASDAQ:TRIL), and RADCOM Ltd. (NASDAQ:RDCM). This group of stocks’ market caps are closest to GFN’s market cap.

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $13 million, significantly below the $1 million figure in GFN’s case. Trillium Therapeutics Inc. (NASDAQ:TRIL) is the most popular stock in this table, while RADCOM Ltd. (NASDAQ:RDCM) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks General Finance Corporation (NASDAQ:GFN) is even less popular than RDCM. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is required.