What Do Hedge Funds Think of EnteroMedics Inc (ETRM)?

Because EnteroMedics Inc (NASDAQ:ETRM) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of funds that decided to sell off their entire stakes by the end of the third quarter. Intriguingly, Stuart Weisbrod’s Iguana Healthcare Management said goodbye to the largest investment of the “upper crust” of funds followed by Insider Monkey, valued at about $0.7 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dumped its position too. These transactions are important to note, as total hedge fund interest was cut by 1 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as EnteroMedics Inc (NASDAQ:ETRM) but similarly valued. We will take a look at Biodel Inc (NASDAQ:BIOD), Rubicon Technology, Inc. (NASDAQ:RBCN), Echelon Corporation (NASDAQ:ELON), and Acura Pharmaceuticals, Inc. (NASDAQ:ACUR). All of these stocks’ market caps match ETRM’s market cap.

As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $1 million in ETRM’s case. Biodel Inc (NASDAQ:BIOD) is the most popular stock in this table. On the other hand Echelon Corporation (NASDAQ:ELON) is the least popular one with only 4 bullish hedge fund positions. EnteroMedics Inc (NASDAQ:ETRM) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BIOD might be a better candidate to consider a long position.