Jeffrey Bronchick’s Cove Street Capital, Matthew Drapkin and Steven R. Becker’s Northern Right Capital Management, and J. Carlo Cannell’s Cannell Capital have disclosed their latest moves involving three companies: Avid Technology Inc. (NASDAQ:AVID), EMCORE Corporation (NASDAQ:EMKR), and EVINE Live Inc (NASDAQ:EVLV), respectively, in three separate filings with the U.S. Securities and Exchange Commission. Cove Street Capital reported increasing its stake in Avid Technology, while Northern Right Capital Management disclosed cutting its position in EMCORE Corporation. In addition, Cannell Capital revealed a letter it sent to EVINE Live’s Chief Executive Officer (CEO) and Director Mark C. Bozek. We’ll discuss all of these moves in more details below.
We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 102% since then and outperformed the S&P 500 Index by around 53 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.
First, let’s take a look at Cove Street Capital’s move in Avid Technology Inc. (NASDAQ:AVID). The fund has increased its holding to 2.14 million shares compared to 1.92 million shares held at the end of September. The stake currently represents 5.4% of the company’s outstanding common stock. Avid Technology is a $283.64-million technology company, which provides software and systems for the creation of digital media content. The company did not post impressive results for the third quarter, with its operating income dropping to $14.41 million, versus $15.06 million in the same quarter a year ago. Revenue slipped to $137.4 million, compared to $142.4 million a year earlier. According to the company, its paid subscribers exceeded 20,000 users. Hedge fund interest in Avid Technology Inc. (NASDAQ:AVID)’s shares was flat at the end of the third quarter. A total of 19 hedge funds we track were bullish on this stock, while the total value of their holdings slid to $104.22 million at the end of September from $174.50 million a quarter earlier. Aside from Cove Street Capital, Richard Blum’s Blum Capital Partners holds 6.88 million shares of Avid Technology as of the end of September.
Follow Jeffrey Bronchick's Cove Street Capital
On the next page, we’ll be talking about the latest moves of Northern Right Capital Management and Cannell Capital.
In a newly amended filing, Northern Right Capital Management disclosed ownership of 1.31 million shares of EMCORE shares, down from 1.81 million shares held previously. The stake is equal to 5.1% of the company’s outstanding stock. EMCORE Corporation (NASDAQ:EMKR) is a provider of compound semiconductor-based components, subsystems, and systems for the broadband and specialty fiber optics market. The company improved its financial position during the third fiscal quarter, reporting a profit of $2.44 million, compared to a loss of $3.15 million a year earlier period. Revenue rose to $21.19 million, versus $13.60 million a year ago. We saw an increase in hedge funds’ interest toward EMCORE Corporation (NASDAQ:EMKR) during the third quarter. A total of 16 funds we track were holding the stock at the end of September, compared to 12 investors a quarter earlier. Moreover, the aggregate value of their investments increased to $32.01 million from $33.12 million. Jim Simons’ Renaissance Technologies is the second largest shareholder of EMCORE among the funds we track, holding 794,178 shares at the end of September.
Follow Steven R. Becker And Matthew Drapkin's Becker Drapkin Management
Finally, Cannell Capital disclosed a letter sent to EVINE Live’s CEO Mark C. Bozek. According to the filing, Cannell Capital owns 4.61 million EVINE Live shares, equal to 8.07% of the company’s outstanding common stock. The stake represents an increase from 4.58 million shares the fund held at the end of the third quarter.
In his letter, Mr. Cannell urged the company’s board members that EVINE Live Inc (NASDAQ:EVLV) should buy back no less than 15% of its common shares by means of a single price ($2.00) tender or modified Dutch Auction tender using a price range of $1.95 to $2.10. Further, Mr. Cannell asked the addition of Charles M. Gillman to its board of directors.
“We believe EVLV is at the end of a painful six-year turnaround. The wisps of growth, although not linear, appear evident to us. Although the turn isn’t obvious, the considerable operating leverage in EVLV’s fixed cost business is. You [EVINE Live] have cleaned up the capital structure, reduced “carriage” costs, improved channel positions and reinvigorated merchandise to make such more relevant and fun,” the letter said.
EVINE Live is a digital commerce company with a market cap of $107.97 million. The company’s shares have been struggling since May, losing 71.32% year-to-date. EVINE Live booked a loss of $5.18 million for the third quarter, versus a loss of $808 million for the same period last year. However, the company managed to increase its quarterly sales to $162.26 million compared to $157.11 million a year earlier. Another investor betting big on EVINE Live is Paul Reeder and Edward Shapiro’s PAR Capital Management, owning 4.24 million shares as of the end of the end of the third quarter.
Follow J. Carlo Cannell's Cannell Capital
Disclosure: none
