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How YuMe Inc (YUME) Stacks Up Against Its Peers

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It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in YuMe Inc (NYSE:YUME).

YuMe Inc (NYSE:YUME) shareholders have witnessed a decrease in enthusiasm from smart money in recent months. There were 11 hedge funds in our database with YUME holdings at the end of the second quarter, 2 more than at the end of the third quarter. At the end of this article we will also compare YUME to other stocks including Pure Cycle Corporation (NASDAQ:PCYO), Points International Ltd (USA) (NASDAQ:PCOM), and Ampco-Pittsburgh Corp. (NYSE:AP) to get a better sense of its popularity.

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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

Bakhtiar Zein/Shutterstock.com

Bakhtiar Zein/Shutterstock.com

Hedge fund activity in YuMe Inc (NYSE:YUME)

Heading into the fourth quarter of 2016, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, an 18% drop from the second quarter of 2016. The graph below displays the number of hedge funds with bullish positions in YUME over the last 5 quarters, which had steadily risen until the most recent quarter. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

HedgeFundSentimentChart

When looking at the institutional investors followed by Insider Monkey, Cannell Capital, led by J. Carlo Cannell, holds the number one position in YuMe Inc (NYSE:YUME). Cannell Capital has a $5.7 million position in the stock, comprising 2.3% of its 13F portfolio. Coming in second is Chuck Royce of Royce & Associates, with a $2.7 million position. Other hedge funds and institutional investors with similar optimism encompass Renaissance Technologies, one of the largest hedge funds in the world, Jack Ripsteen’s Potrero Capital Research, and Charles Frumberg’s Emancipation Capital. We should note that Potrero Capital Research is among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.

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