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Do you like to follow the buying trends of the 'Smart Money' investors? These investors, including hedge fund managers and mutual fund managers, are thought to have the experience and knowledge to make good trades. We ran a screen with this in mind.

We screened for stocks currently trading under $5 a share that are also rallying above their 200-day moving average. We then screened for those with the most significant net institutional purchases over the current quarter, indicating that institutional investors such as hedge fund managers expect these stocks to continue to outperform.

We thought this would be a good start to finding investment ideas that might have been ignored due to its recent rally.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the 4 stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

Tool provided by Kapitall.

Do you think hedge funds are calling it right on these names? Use this list as a starting point for your own analysis. For further analysis on these stocks, we encourage you to use Number Cruncher on Kapitall.

1. Dynavax Technologies Corporation (NASDAQ:DVAX): DA clinical-stage biopharmaceutical company, discovers and develops novel products to prevent and treat infectious diseases. Market cap at $827.43M, most recent closing price at $4.63. The stock is currently rallying 8.64% above its 200-day moving average. Net institutional purchases in the current quarter at 17.0M shares, which represents about 10.16% of the company's float of 167.38M shares.

2. Fortress Investment Group LLC (NYSE:FIG): A public investment firm specializing in investments in debt and equity securities of public and privately held companies. Market cap at $2.29B, most recent closing price at $4.41. The stock is currently rallying 16.58% above its 200-day moving average. Net institutional purchases in the current quarter at 10.6M shares, which represents about 5.02% of the company's float of 211.22M shares.

3. Hovnanian Enterprises Inc. (NYSE:HOV): Engages in homebuilding and financial services businesses in the United States. Market cap at $542.27M, most recent closing price at $4.61. The stock is currently rallying 60.72% above its 200-day moving average. Net institutional purchases in the current quarter at 14.8M shares, which represents about 14.02% of the company's float of 105.54M shares.

4. Rentech, Inc. (NASDAQ:RTK): Provides alternative and clean energy solutions; and manufactures and sells nitrogen fertilizer products. Market cap at $578.63M, most recent closing price at $2.62. The stock is currently rallying 23.31% above its 200-day moving average. Net institutional purchases in the current quarter at 12.6M shares, which represents about 6.15% of the company's float of 204.74M shares.

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

Source: 4 Rallying Hedge Fund Picks Trading Under $5