Should You Avoid Open Text Corporation (USA) (OTEX)?

Judging by the fact that Open Text Corporation (USA) (NASDAQ:OTEX) has faced bearish sentiment from the entirety of the hedge funds we track, we can see that there is a sect of hedge funds that decided to sell off their positions entirely last quarter. It’s worth mentioning that Daniel Bubis’s Tetrem Capital Management sold off the biggest stake of the 700 funds watched by Insider Monkey, totaling about $59.7 million in stock, and Joel Greenblatt’s Gotham Asset Management was right behind this move, as the fund dropped about $15.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Open Text Corporation (USA) (NASDAQ:OTEX) but similarly valued. These stocks are The Madison Square Garden Co (NYSE:MSG), Lions Gate Entertainment Corp. (USA) (NYSE:LGF), Lazard Ltd (NYSE:LAZ), and OGE Energy Corp. (NYSE:OGE). This group of stocks’ market caps resemble OTEX’s market cap.

As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $1,081 million. That figure was $96 million in OTEX’s case. Lions Gate Entertainment Corp. (USA) (NYSE:LGF) is the most popular stock in this table. On the other hand Lazard Ltd (NYSE:LAZ) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Open Text Corporation (USA) (NASDAQ:OTEX) is even less popular than LAZ. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.