8 Highly Liquid Small Caps Being Bought Up By Hedge Funds

Are you diversified across all market-cap sectors? For a closer look at the small-cap sector, we ran a screen.

We began by screening for small-cap stocks with strong liquidity, with current and quick ratios above 3. The current ratio is current assets/current liabilities, so a ratio above 3 indicates the company has at least 3 times the liquid assets to cover its short-term liabilities.

We then screened for those with bullish sentiment from institutional investors, with significant net institutional purchases over the last quarter representing at least 5% of share float. This indicates that institutional investors such as hedge fund managers and mutual fund managers expect these names to outperform into the future.

For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.

Tool provided by Kapitall.

Do you think hedge funds are calling it right on these stocks? Use this list as a starting point for your own analysis.

List sorted by net institutional purchases as a percent of share float.

1. Sagent Pharmaceuticals (SGNT): Engages in developing, manufacturing, sourcing, and marketing pharmaceutical products, principally injectable-based generic equivalents primarily in the United States. Market cap at $543.32M, most recent closing price at $19.46. Current ratio at 4.54, quick ratio at 3.12. Net institutional purchases in the current quarter at 4.7M shares, which represents about 31.23% of the company's float of 15.05M shares.

2. Clearwire Corporation (CLWR): Provides wireless broadband services. Market cap at $996.62M, most recent closing price at $1.01. Current ratio at 3.46, quick ratio at 3.43. Net institutional purchases in the current quarter at 62.5M shares, which represents about 22.13% of the company's float of 282.39M shares.

3. Cirrus Logic, Inc. (CRUS): Develops high-precision analog and mixed-signal integrated circuits. Market cap at $1.82B, most recent closing price at $28.24. Current ratio at 4.82, quick ratio at 4.05. Net institutional purchases in the current quarter at 9.7M shares, which represents about 15.14% of the company's float of 64.08M shares.

4. ABIOMED, Inc. (ABMD): Engages in the research, development, and sale of medical devices that provide circulatory support to acute heart failure patients across the continuum of care in heart recovery. Market cap at $863.47M, most recent closing price at $21.86. Current ratio at 4.93, quick ratio at 4.43. Net institutional purchases in the current quarter at 4.2M shares, which represents about 13.75% of the company's float of 30.54M shares.

5. K12 Inc. (LRN): Provides proprietary curriculum and educational services for online delivery to students in kindergarten through 12th grade (K12) primarily in the United States. Market cap at $636.78M, most recent closing price at $17.47. Current ratio at 3.43, quick ratio at 3.18. Net institutional purchases in the current quarter at 3.0M shares, which represents about 11.48% of the company's float of 26.14M shares.

6. Deckers Outdoor Corporation (DECK): Engages in the design, production, marketing, and brand management of footwear and accessories for outdoor activities and everyday casual lifestyle use. Market cap at $1.62B, most recent closing price at $42.13. Current ratio at 6.81, quick ratio at 4.62. Net institutional purchases in the current quarter at 3.7M shares, which represents about 10.07% of the company's float of 36.76M shares.

7. NovaGold Resources, Inc. (NG): Engages in the exploration and development of mineral properties primarily in North America. Market cap at $1.12B, most recent closing price at $4.02. Current ratio at 8.89, quick ratio at 8.87. Net institutional purchases in the current quarter at 16.3M shares, which represents about 8.7% of the company's float of 187.35M shares.

8. Radware Ltd. (RDWR): Provides application delivery solutions and network security solutions to banks, insurance companies, manufacturing and retail, government agencies, media companies, and service providers worldwide. Market cap at $553.31M, most recent closing price at $29.03. Current ratio at 5.23, quick ratio at 4.98. Net institutional purchases in the current quarter at 1.2M shares, which represents about 8.62% of the company's float of 13.92M shares.

*Institutional data sourced from Fidelity, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.