Here is What Hedge Funds Think About Amber Road Inc (AMBR)

Is Amber Road Inc (NYSE:AMBR) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy league graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments (for some reason media paid a ton of attention to Ackman’s gigantic JC Penney and Valeant failures) and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Hedge fund interest in Amber Road Inc (NYSE:AMBR) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare AMBR to other stocks including Alaska Communications Systems Group Inc (NASDAQ:ALSK), ASB Bancorp Inc (NASDAQ:ASBB), and PC Tel Inc (NASDAQ:PCTI) to get a better sense of its popularity.

Keeping this in mind, let’s take a peek at the recent action encompassing Amber Road Inc (NYSE:AMBR).

What have hedge funds been doing with Amber Road Inc (NYSE:AMBR)?

At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the second quarter. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Michael Murphy and Daniel Donoghue’s Discovery Group has the number one position in Amber Road Inc (NYSE:AMBR), worth close to $10.9 million, accounting for 3.7% of its total 13F portfolio. Coming in second is Chuck Royce of Royce & Associates, with an $0.9 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions comprise Mark Coe’s Coe Capital Management, Jim Simons’ Renaissance Technologies and Israel Englander’s Millennium Management.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Skylands Capital. 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 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was D E Shaw).

Let’s go over hedge fund activity in other stocks similar to Amber Road Inc (NYSE:AMBR). We will take a look at Alaska Communications Systems Group Inc (NASDAQ:ALSK), ASB Bancorp Inc (NASDAQ:ASBB), PC Tel Inc (NASDAQ:PCTI), and Olympic Steel, Inc. (NASDAQ:ZEUS). All of these stocks’ market caps are similar to AMBR’s market cap.

As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $13 million in AMBR’s case. Olympic Steel, Inc. (NASDAQ:ZEUS) is the most popular stock in this table. On the other hand ASB Bancorp Inc (NASDAQ:ASBB) is the least popular one with only 4 bullish hedge fund positions. Amber Road Inc (NYSE:AMBR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ZEUS might be a better candidate to consider a long position.