Why Violin Memory Inc (VMEM)’s Stock Plunged Today?

Because Violin Memory Inc (NYSE:VMEM) has experienced a bearish sentiment from the smart money, it’s safe to say that there exists a select few funds who sold off their entire stakes last quarter. Intriguingly, Ryan Heslop and Ariel Warszawski’s Firefly Value Partners dropped the largest investment of all the hedgies tracked by Insider Monkey, worth about $0.2 million in stock. Matthew Hulsizer’s fund, PEAK6 Capital Management, also cut its stock.

Let’s now review hedge fund activity in other stocks similar to Violin Memory Inc (NYSE:VMEM). We will take a look at Rentech, Inc. (NYSEAMEX:RTK), Good Times Restaurants Inc. (NASDAQ:GTIM), Transition Therapeutics Inc (USA) (NASDAQ:TTHI), and Morgans Hotel Group Co. (NASDAQ:MHGC). This group of stocks’ market values are closest to VMEM’s market value.

As you can see these stocks had an average of six hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $5 million in VMEM’s case. Morgans Hotel Group Co. (NASDAQ:MHGC) is the most popular stock in this table. On the other hand Good Times Restaurants Inc. (NASDAQ:GTIM) is the least popular one with only 4 bullish hedge fund positions. Violin Memory Inc (NYSE:VMEM) 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 MHGC might be a better candidate to consider a long position.

Disclosure: None