Many investors, including Carl Icahn or Stan Druckenmiller, have been saying for a while now that the current market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the third quarter, many investors lost money due to unpredictable events such as the concerns over Valeant’s drug pricing policy that led to an overall drop among pharma stocks. Nevertheless, many of the stocks that tanked in the third quarter still sport strong fundamentals and their decline was more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Actua Corp (NASDAQ:ACTA) changed recently.
Actua Corp (NASDAQ:ACTA) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in an 8 hedge funds’ portfolios at the end of the third quarter of 2015. 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 Intralinks Holdings Inc (NYSE:IL), Vera Bradley, Inc. (NASDAQ:VRA), and Fidelity Southern Corporation (NASDAQ:LION) to gather more data points.
Keeping this in mind, let’s view the fresh action encompassing Actua Corp (NASDAQ:ACTA).
How are hedge funds trading Actua Corp (NASDAQ:ACTA)?
Of the funds tracked by Insider Monkey, Jim Simons’s Renaissance Technologies has the most valuable position in Actua Corp (NASDAQ:ACTA), worth close to $2 million, comprising less than 0.1% of its total 13F portfolio. The second most bullish fund is D E Shaw, with a $1.7 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish encompass Jim Tarantino and Chris Galvin’s Westerly Capital Management, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.
At the top of the heap, Peter Muller’s PDT Partners sold off the largest investment of the 700 funds monitored by Insider Monkey, comprising about $0.4 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also dropped its stock, about $0.2 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Actua Corp (NASDAQ:ACTA) but similarly valued. We will take a look at Intralinks Holdings Inc (NYSE:IL), Vera Bradley, Inc. (NASDAQ:VRA), Fidelity Southern Corporation (NASDAQ:LION), and Vanda Pharmaceuticals Inc. (NASDAQ:VNDA). This group of stocks’ market values resemble ACTA’s market value.
|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 20 hedge funds with bullish positions and the average amount invested in these stocks was $135 million. That figure was $7 million in ACTA’s case. Intralinks Holdings Inc (NYSE:IL) is the most popular stock in this table. On the other hand Vera Bradley, Inc. (NASDAQ:VRA) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Actua Corp (NASDAQ:ACTA) is even less popular than VRA. 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.