Should You Buy Newtek Business Services, Inc (NEWT)?

Seeing as Newtek Business Services, Inc (NASDAQ:NEWT) has experienced falling interest from the aggregate hedge fund industry, it’s easy to see that there were a few hedge funds who sold off their full holdings in the third quarter. It’s worth mentioning that Israel Englander’s Millennium Management sold off the largest stake of all the hedgies monitored by Insider Monkey, comprising an estimated $0.5 million in stock, and Cliff Asness’s AQR Capital Management was right behind this move, as the fund sold off about $0.2 million worth of NEWT shares. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to Newtek Business Services, Inc (NASDAQ:NEWT). We will take a look at Corium International Inc (NASDAQ:CORI), Townsquare Media Inc (NYSE:TSQ), Dicerna Pharmaceuticals Inc (NASDAQ:DRNA), and Fibrocell Science Inc (NASDAQ:FCSC). This group of stocks’ market values resemble NEWT’s market value.

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 $33 million. That figure was a meager $3 million in NEWT’s case. Townsquare Media Inc (NYSE:TSQ) is the most popular stock in this table. On the other hand Fibrocell Science Inc (NASDAQ:FCSC) is the least popular one with only 4 bullish hedge fund positions on par with Newtek Business Services, Inc (NASDAQ:NEWT). 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 warranted.