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Did Hedge Funds Drop The Ball On Brightcove Inc (BCOV) ?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of March. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Brightcove Inc (NASDAQ:BCOV), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Brightcove Inc (NASDAQ:BCOV) a buy right now? Investors who are in the know are becoming less confident. The number of long hedge fund positions were trimmed by 1 lately. Our calculations also showed that BCOV isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

RENAISSANCE TECHNOLOGIES

We’re going to check out the key hedge fund action surrounding Brightcove Inc (NASDAQ:BCOV).

How are hedge funds trading Brightcove Inc (NASDAQ:BCOV)?

Heading into the second quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from one quarter earlier. By comparison, 12 hedge funds held shares or bullish call options in BCOV a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

BCOV_jun2019

Among these funds, Trigran Investments held the most valuable stake in Brightcove Inc (NASDAQ:BCOV), which was worth $29.3 million at the end of the first quarter. On the second spot was Tenzing Global Investors which amassed $23.7 million worth of shares. Moreover, Archon Capital Management, Renaissance Technologies, and Hawk Ridge Management were also bullish on Brightcove Inc (NASDAQ:BCOV), allocating a large percentage of their portfolios to this stock.

Judging by the fact that Brightcove Inc (NASDAQ:BCOV) has experienced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedgies who sold off their positions entirely in the third quarter. Interestingly, Matthew Hulsizer’s PEAK6 Capital Management sold off the largest position of all the hedgies tracked by Insider Monkey, comprising close to $0.4 million in call options. Matthew Hulsizer’s fund, PEAK6 Capital Management, also sold off its call options, about $0.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 1 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Brightcove Inc (NASDAQ:BCOV) but similarly valued. These stocks are Minerva Neurosciences, Inc (NASDAQ:NERV), Arlo Technologies, Inc. (NYSE:ARLO), Phoenix New Media Ltd ADR (NYSE:FENG), and American National BankShares Inc (NASDAQ:AMNB). All of these stocks’ market caps are similar to BCOV’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NERV 11 34144 1
ARLO 12 26452 4
FENG 9 33399 0
AMNB 2 7542 -1
Average 8.5 25384 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $114 million in BCOV’s case. Arlo Technologies, Inc. (NYSE:ARLO) is the most popular stock in this table. On the other hand American National BankShares Inc (NASDAQ:AMNB) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Brightcove Inc (NASDAQ:BCOV) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on BCOV as the stock returned 24.3% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

Disclosure: None. This article was originally published at Insider Monkey.

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