In this article we will take a look at whether hedge funds think Alimera Sciences Inc (NASDAQ:ALIM) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Alimera Sciences Inc (NASDAQ:ALIM) was in 6 hedge funds' portfolios at the end of the first quarter of 2020. ALIM shareholders have witnessed a decrease in support from the world's most elite money managers lately. There were 7 hedge funds in our database with ALIM positions at the end of the previous quarter. Our calculations also showed that ALIM isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most stock holders, hedge funds are perceived as worthless, old financial tools of years past. While there are greater than 8000 funds trading at the moment, Our researchers choose to focus on the top tier of this group, approximately 850 funds. Most estimates calculate that this group of people direct the majority of the smart money's total capital, and by paying attention to their finest stock picks, Insider Monkey has identified many investment strategies that have historically outpaced the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_758402" align="aligncenter" width="399"] William Leland Edwards of Palo Alto Investors[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's go over the fresh hedge fund action regarding Alimera Sciences Inc (NASDAQ:ALIM).
Hedge fund activity in Alimera Sciences Inc (NASDAQ:ALIM)
Heading into the second quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ALIM over the last 18 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, Avoro Capital Advisors (venBio Select Advisor) was the largest shareholder of Alimera Sciences Inc (NASDAQ:ALIM), with a stake worth $1.6 million reported as of the end of September. Trailing Avoro Capital Advisors (venBio Select Advisor) was Palo Alto Investors, which amassed a stake valued at $0.8 million. Renaissance Technologies, Dorset Management, and Royce & Associates were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Dorset Management allocated the biggest weight to Alimera Sciences Inc (NASDAQ:ALIM), around 0.19% of its 13F portfolio. Palo Alto Investors is also relatively very bullish on the stock, designating 0.07 percent of its 13F equity portfolio to ALIM.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Armistice Capital. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified ALIM as a viable investment and initiated a position in the stock.
Let's now take a look at hedge fund activity in other stocks similar to Alimera Sciences Inc (NASDAQ:ALIM). We will take a look at Forum Energy Technologies Inc (NYSE:FET), Caladrius Biosciences Inc (NASDAQ:CLBS), Destination XL Group Inc (NASDAQ:DXLG), and Image Sensing Systems, Inc. (NASDAQ:ISNS). All of these stocks' market caps match ALIM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FET,12,1081,-4 CLBS,1,769,0 DXLG,7,6520,0 ISNS,1,782,0 Average,5.25,2288,-1 [/table]
View table here if you experience formatting issues.
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 $2 million. That figure was $3 million in ALIM's case. Forum Energy Technologies Inc (NYSE:FET) is the most popular stock in this table. On the other hand Caladrius Biosciences Inc (NASDAQ:CLBS) is the least popular one with only 1 bullish hedge fund positions. Alimera Sciences Inc (NASDAQ:ALIM) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but beat the market by 14.2 percentage points. Unfortunately ALIM wasn't nearly as popular as these 10 stocks and hedge funds that were betting on ALIM were disappointed as the stock returned 23% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.