How SeaChange International (SEAC) Stacks Up Against Its Peers

At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

Is SeaChange International (NASDAQ:SEAC) ready to rally soon? Hedge funds are actually becoming less hopeful. The number of long hedge fund bets that are revealed through the 13F filings fell by 1 recently. SEAC was in 9 hedge funds’ portfolios at the end of September. There were 10 hedge funds in our database with SEAC 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 CDI Corp. (NYSE:CDI), Sequans Communications SA ADR (NYSE:SQNS), and GSV Capital Corp (NASDAQ:GSVC) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Hedge fund activity in SeaChange International (NASDAQ:SEAC)

At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, down by 10% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SEAC over the last 5 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Ariel Investments, led by John W. Rogers, holds the most valuable position in SeaChange International (NASDAQ:SEAC). Ariel Investments has a $14.5 million position in the stock. The second largest stake is held by Royce & Associates, led by Chuck Royce, which holds a $8.1 million position. Some other hedge funds and institutional investors with similar optimism encompass Renaissance Technologies, one of the largest hedge funds in the world, John Zaro’s Bourgeon Capital and Israel Englander’s Millennium Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually said goodbye to their positions entirely. At the top of the heap, Benjamin A. Smith’s Laurion Capital Management said goodbye to the largest investment of the 700 funds monitored by Insider Monkey, totaling about $0.3 million in stock, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners was right behind this move, as the fund sold off about $0.1 million worth of shares.

Let’s now take a look at hedge fund activity in other stocks similar to SeaChange International (NASDAQ:SEAC). We will take a look at CDI Corp. (NYSE:CDI), Sequans Communications SA ADR (NYSE:SQNS), GSV Capital Corp (NASDAQ:GSVC), and Edgewater Technology Inc. (NASDAQ:EDGW). This group of stocks’ market values are similar to SEAC’s market value.

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $28 million in SEAC’s case. CDI Corp. (NYSE:CDI) is the most popular stock in this table. On the other hand Edgewater Technology Inc. (NASDAQ:EDGW) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks SeaChange International (NASDAQ:SEAC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None