As we already know from media reports and hedge fund investor letters, many hedge funds lost money in the third quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about Servicesource International Inc (NASDAQ:SREV) in this article.
Is Servicesource International Inc (NASDAQ:SREV) a good stock to buy now? The smart money is in a pessimistic mood. The number of bullish hedge fund positions was cut by 2 in recent months. Servicesource International Inc (NASDAQ:SREV) was in 12 hedge funds’ portfolios at the end of the third quarter of 2015. There were 14 hedge funds in our database with Servicesource International Inc (NASDAQ:SREV) holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Navidea Biopharmaceuticals Inc (NYSEMKT:NAVB), Ares Commercial Real Estate Corp (NYSE:ACRE), and Xcerra Corp (NASDAQ:XCRA) to gather more data points.
In the 21st century investor’s toolkit there are a large number of tools market participants put to use to value publicly traded companies. A duo of the most under-the-radar tools are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can trounce the broader indices by a healthy margin (see the details here).
With all of this in mind, let’s take a look at the new action regarding Servicesource International Inc (NASDAQ:SREV).
What does the smart money think about Servicesource International Inc (NASDAQ:SREV)?
Heading into Q4, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a decline of 14% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Rishi Bajaj, Toby Symonds, and Steve Tesoriere’s Altai Capital has the number one position in Servicesource International Inc (NASDAQ:SREV), worth close to $46.9 million, accounting for 27.4% of its total 13F portfolio. The second most bullish fund manager is RGM Capital, led by Robert G. Moses, holding a $23.5 million position; 3.1% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish include Joseph A. Jolson’s Harvest Capital Strategies, Phil Frohlich’s Prescott Group Capital Management and J. Carlo Cannell’s Cannell Capital.
Judging by the fact that Servicesource International Inc (NASDAQ:SREV) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there exists a select few hedge funds that elected to cut their positions entirely in the third quarter. It’s worth mentioning that John Overdeck and David Siegel’s Two Sigma Advisors sold off the biggest stake of all the hedgies watched by Insider Monkey, worth an estimated $0.2 million in stock, and Paul Marshall and Ian Wace of Marshall Wace LLP was right behind this move, as the fund cut about $0.1 million worth. These moves are important to note, as total hedge fund interest dropped by 2 funds in the third quarter.
Let’s check out hedge fund activity in other stocks similar to Servicesource International Inc (NASDAQ:SREV). We will take a look at Navidea Biopharmaceuticals Inc (NYSEMKT:NAVB), Ares Commercial Real Estate Corp (NYSE:ACRE), Xcerra Corp (NASDAQ:XCRA), and Arrowhead Research Corp (NASDAQ:ARWR). All of these stocks’ market caps are similar to Servicesource International Inc (NASDAQ:SREV)’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see, these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. Even though, Servisource International is not the most popular stock in this group, the total value of hedge funds’ positions amounted to $119 million at the end of September, which signals that it might be headed towards gaining more ground in the upcoming months.