The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards FX Energy, Inc. (NASDAQ:FXEN), and what that likely means for the prospects of the company and its stock.
Is FX Energy, Inc. (NASDAQ:FXEN) a healthy stock for your portfolio? Investors who are in the know are turning less bullish. During a quarter in which shares rose by 12%, the number of bullish hedge fund bets was cut by 1. FXEN was in 5 hedge funds’ portfolios at the end of September, with them owning just 3.80% of its shares. There were 6 hedge funds in our database with FXEN positions at the end of the second 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 Golden Star Resources Ltd. (USA) (NYSEMKT:GSS), Marrone Bio Innovations Inc (NASDAQ:MBII), and Aptose Biosciences Inc (NASDAQ:APTO) to gather more data points.
In today’s marketplace there are many indicators investors have at their disposal to assess publicly traded companies. Some of the most under-the-radar indicators are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the top investment managers can outpace the S&P 500 by a solid margin (see the details here).
Keeping this in mind, we’re going to take a glance at the new action regarding FX Energy, Inc. (NASDAQ:FXEN).
How are hedge funds trading FX Energy, Inc. (NASDAQ:FXEN)?
Heading into Q4, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 17% decline from the previous quarter. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or had already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Paul Solit’s Potomac Capital Management has the largest position in FX Energy, Inc. (NASDAQ:FXEN), worth close to $1.3 million, corresponding to 1.6% of its total 13F portfolio. Coming in second is CQS Cayman LP, managed by Michael Hintze, which holds a $0.3 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish include Israel Englander’s Millennium Management, Renaissance Technologies, and Ken Griffin’s Citadel Investment Group.
Since FX Energy, Inc. (NASDAQ:FXEN) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there is a sect of hedgies who were dropping their entire stakes in the third quarter. At the top of the heap, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners sold off the largest stake of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $46,000 in shares underlying call options, while Ken Griffin’s Citadel Investment Group was right behind this move, as the fund said goodbye to about $38,000 worth of shares. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 1 fund in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as FX Energy, Inc. (NASDAQ:FXEN) but similarly valued. We will take a look at Golden Star Resources Ltd. (USA) (NYSEMKT:GSS), Marrone Bio Innovations Inc (NASDAQ:MBII), Aptose Biosciences Inc (NASDAQ:APTO), and Cytori Therapeutics Inc. (USA) (NASDAQ:CYTX). This group of stocks’ market caps are closest to FXEN’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $2 million in FXEN’s case. Aptose Biosciences Inc (NASDAQ:APTO) is the most popular stock in this table. On the other hand Golden Star Resources Ltd. (USA) (NYSEMKT:GSS) is the least popular one with only 4 bullish hedge fund positions. FX Energy, Inc. (NASDAQ:FXEN) 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 APTO might be a better candidate to consider a long position in.