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Did Hedge Funds Drop The Ball On Electronics For Imaging, Inc. (EFII) ?

At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31. In this article, we will use that wealth of knowledge to determine whether or not Electronics For Imaging, Inc. (NASDAQ:EFII) makes for a good investment right now.

Is Electronics For Imaging, Inc. (NASDAQ:EFII) a splendid stock to buy now? Money managers are reducing their bets on the stock. The number of bullish hedge fund bets shrunk by 2 in recent months. Our calculations also showed that efii isn’t among the 30 most popular stocks among hedge funds. EFII was in 12 hedge funds’ portfolios at the end of December. There were 14 hedge funds in our database with EFII positions at the end of the previous quarter.

In the eyes of most shareholders, hedge funds are viewed as slow, old investment vehicles of years past. While there are over 8000 funds in operation at the moment, Our researchers choose to focus on the crème de la crème of this club, approximately 750 funds. These money managers control the majority of the hedge fund industry’s total capital, and by shadowing their unrivaled stock picks, Insider Monkey has found a few investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by nearly 5 percentage points per year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

Izzy Englander of MILLENNIUM MANAGEMENT

We’re going to check out the recent hedge fund action encompassing Electronics For Imaging, Inc. (NASDAQ:EFII).

What does the smart money think about Electronics For Imaging, Inc. (NASDAQ:EFII)?

Heading into the first quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EFII over the last 14 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with EFII Positions

When looking at the institutional investors followed by Insider Monkey, Cadian Capital, managed by Eric Bannasch, holds the biggest position in Electronics For Imaging, Inc. (NASDAQ:EFII). Cadian Capital has a $83.5 million position in the stock, comprising 3.9% of its 13F portfolio. Sitting at the No. 2 spot is Bruce Emery of Greenvale Capital, with a $19.6 million position; 9.3% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish contain Richard Mashaal’s Rima Senvest Management, Israel Englander’s Millennium Management and John Overdeck and David Siegel’s Two Sigma Advisors.

Because Electronics For Imaging, Inc. (NASDAQ:EFII) has faced declining sentiment from hedge fund managers, we can see that there is a sect of hedgies who were dropping their full holdings last quarter. Intriguingly, Malcolm Fairbairn’s Ascend Capital dumped the biggest position of all the hedgies monitored by Insider Monkey, totaling about $19.5 million in stock. Jeffrey Talpins’s fund, Element Capital Management, also cut its stock, about $9.6 million worth. These moves are important to note, as total hedge fund interest was cut by 2 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Electronics For Imaging, Inc. (NASDAQ:EFII) but similarly valued. We will take a look at OceanFirst Financial Corp. (NASDAQ:OCFC), SemGroup Corp (NYSE:SEMG), Editas Medicine, Inc. (NASDAQ:EDIT), and Casa Systems, Inc. (NASDAQ:CASA). This group of stocks’ market caps match EFII’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OCFC 12 57674 -3
SEMG 12 34576 5
EDIT 18 105423 1
CASA 12 28507 2
Average 13.5 56545 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $138 million in EFII’s case. Editas Medicine, Inc. (NASDAQ:EDIT) is the most popular stock in this table. On the other hand OceanFirst Financial Corp. (NASDAQ:OCFC) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Electronics For Imaging, Inc. (NASDAQ:EFII) is even less popular than OCFC. Hedge funds clearly dropped the ball on EFII as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on EFII as the stock returned 51.4% and outperformed the market by an even larger margin.

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

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