Cyren Ltd (CYRN): Hedge Funds In Wait-and-See Mode
Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Cyren Ltd (NASDAQ:CYRN) to find out whether there were any major changes in hedge funds' views.
Cyren Ltd (NASDAQ:CYRN) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds' portfolios at the end of the first quarter of 2021. Our calculations also showed that CYRN isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare CYRN to other stocks including Inhibikase Therapeutics, Inc. (NASDAQ:IKT), ALJ Regional Holdings, Inc. (NASDAQ:ALJJ), and Socket Mobile, Inc. (NASDAQ:SCKT) to get a better sense of its popularity.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Wil Harkey of Nantahala Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let's take a glance at the recent hedge fund action encompassing Cyren Ltd (NASDAQ:CYRN).
Do Hedge Funds Think CYRN Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CYRN over the last 23 quarters. With hedge funds' sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Cyren Ltd (NASDAQ:CYRN), which was worth $1.1 million at the end of the fourth quarter. On the second spot was Nantahala Capital Management which amassed $0.5 million worth of shares. Citadel Investment Group was 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 Nantahala Capital Management allocated the biggest weight to Cyren Ltd (NASDAQ:CYRN), around 0.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.0014 percent of its 13F equity portfolio to CYRN.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Rima Senvest Management. 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 only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Cyren Ltd (NASDAQ:CYRN) but similarly valued. We will take a look at Inhibikase Therapeutics, Inc. (NASDAQ:IKT), ALJ Regional Holdings, Inc. (NASDAQ:ALJJ), Socket Mobile, Inc. (NASDAQ:SCKT), Birks Group Inc. (NYSE:BGI), RF Industries, Ltd. (NASDAQ:RFIL), Microbot Medical Inc. (NASDAQ:MBOT), and First Seacoast Bancorp (NASDAQ:FSEA). All of these stocks' market caps are closest to CYRN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IKT,2,174,2 ALJJ,4,1384,2 SCKT,3,859,1 BGI,2,405,0 RFIL,2,4408,-1 MBOT,2,236,1 FSEA,1,143,0 Average,2.3,1087,0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.3 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $2 million in CYRN's case. ALJ Regional Holdings, Inc. (NASDAQ:ALJJ) is the most popular stock in this table. On the other hand First Seacoast Bancorp (NASDAQ:FSEA) is the least popular one with only 1 bullish hedge fund positions. Cyren Ltd (NASDAQ:CYRN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CYRN is 60.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately CYRN wasn't nearly as popular as these 5 stocks and hedge funds that were betting on CYRN were disappointed as the stock returned -9.9% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
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