Is Marchex, Inc. (NASDAQ:MCHX) a great stock to buy now? Prominent investors are turning less bullish. The number of long hedge fund positions were trimmed by 2 lately.
According to most shareholders, hedge funds are seen as slow, outdated investment vehicles of yesteryear. While there are more than 8000 funds with their doors open at present, we at Insider Monkey choose to focus on the bigwigs of this group, around 450 funds. It is estimated that this group controls the majority of all hedge funds' total capital, and by tracking their top stock picks, we have revealed a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Equally as integral, positive insider trading activity is a second way to parse down the stock market universe. Just as you'd expect, there are lots of stimuli for a corporate insider to drop shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the valuable potential of this method if piggybackers know what to do (learn more here).
Consequently, let's take a gander at the latest action regarding Marchex, Inc. (NASDAQ:MCHX).
In preparation for this quarter, a total of 5 of the hedge funds we track held long positions in this stock, a change of -29% from one quarter earlier. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their holdings substantially.
Of the funds we track, Constantinos J. Christofilis's Archon Capital Management had the most valuable position in Marchex, Inc. (NASDAQ:MCHX), worth close to $10.9 million, comprising 5.7% of its total 13F portfolio. The second largest stake is held by Jim Simons of Renaissance Technologies, with a $1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds with similar optimism include Chuck Royce's Royce & Associates, D. E. Shaw's D E Shaw and John Overdeck and David Siegel's Two Sigma Advisors.
Because Marchex, Inc. (NASDAQ:MCHX) has experienced falling interest from the smart money, it's safe to say that there is a sect of fund managers who sold off their entire stakes heading into Q2. It's worth mentioning that Thomas E. Claugus's GMT Capital dropped the largest position of all the hedgies we key on, valued at an estimated $6.3 million in stock.. Cliff Asness's fund, AQR Capital Management, also dumped its stock, about $0.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 2 funds heading into Q2.
Insider buying is most useful when the primary stock in question has experienced transactions within the past half-year. Over the latest half-year time frame, Marchex, Inc. (NASDAQ:MCHX) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).
Let's also examine hedge fund and insider activity in other stocks similar to Marchex, Inc. (NASDAQ:MCHX). These stocks are Millennial Media, Inc. (NYSE:MM), Harte-Hanks, Inc. (NYSE:HHS), Constant Contact Inc (NASDAQ:CTCT), Dex One Corporation (NYSE:DEXO), and AirMedia Group Inc (ADR) (NASDAQ:AMCN). This group of stocks are in the marketing services industry and their market caps are similar to MCHX's market cap.