P.A.W. Capital Partners L.P. is the managing entity of three multi-investor equity hedge funds founded by Peter A. Wright, former President and CEO of broker/dealer SoundView Financial Group, in December of 1990. The Connecticut-based asset manager, which seeks to generate double-digit annual returns for investors, has approximately $170 million in total capital under management. When asked about his decision to launch his own hedge fund, Mr. Wright said: “The basic issue was that as a broker/dealer I liked playing the game better than managing a bunch of prima donnas.”
The investment strategy employed by P.A.W Capital Partners looks relatively straightforward and simple on paper, as Peter Wright and his team seek to invest in companies where their view is significantly different from the generally-accepted thesis. Put differently, the team at P.A.W Capital buys equity securities with inexpensive valuations where their expectations are higher than others, while shorting stocks with inflated valuations where their expectations are lower than others. Without further delay, let’s have a look at a list of five technology stocks owned by P.A.W. Capital Partners, as well as discuss how the investment firm reshuffled its positions in those five stocks during the second quarter.
Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).
Lifelock Inc. (NYSE:LOCK)
– Shares Owned by P.A.W. Capital Partners L.P. (as of June 30): 200,000
– Value of P.A.W. Capital Partners L.P.’s Holding (as of June 30): $3.16 Million
P.A.W. Capital did not adjust its 200,000-share position in Lifelock Inc. (NYSE:LOCK) during the second quarter of 2016, which was valued at $3.16 million on June 30. The position accounted for 3.6% of the value of the hedge fund’s equity portfolio at the end of June. The provider of proactive identity theft protection services has seen the value of its stock advance by 16% since the start of the year. Just recently, Lifelock announced that it has hired New York-based investment bank Evercore Partners to explore strategic alternatives, including a possible sale of the company, in an attempt to appease activist hedge fund Elliott Management. In mid-June, Paul Singer’s activist firm revealed economic exposure to Lifelock totaling approximately 8.8% of the company’s float, saying that Lifelock shares were undervalued. Elliott Management then started a dialogue with the company’s management and Board concerning opportunities to enhance shareholder value. In December, the company settled a U.S. Federal Trade Commission charge relating to deceptive advertising and failure to properly secure consumers’ personal information. Ken Fisher’s Fisher Asset Management reported ownership of 326,207 shares of Lifelock Inc. (NYSE:LOCK) through the current round of 13F filings.
Marchex Inc. (NASDAQ:MCHX)
– Shares Owned by P.A.W. Capital Partners L.P. (as of June 30): 1.10 Million
– Value of P.A.W. Capital Partners L.P.’s Holding (as of June 30): $3.50 Million
The Connecticut-based asset manager increased its holding of Marchex Inc. (NASDAQ:MCHX) by 31% during the three-month period ended June 30, to 1.10 million shares valued at $3.50 million. The mobile advertising analytics company has lost 12% of its market value in 2016, which could be hit further today after the company released a disappointing second quarter earnings report after yesterday’s market close, reporting that a small number of large clients reduced their marketing spend. Marchex reported revenue of $34.4 million for the quarter, down from $35.3 million posted a year earlier, while EPS missed estimates by $0.11. The company’s primary product offering, Marchex Call Analytics, represents an analytics platform for companies that are dependent on inbound phone calls to drive sales, appointments and reservations. The product offering assists companies in optimizing advertising expenditures across various media channels. Phil Frohlich’s Prescott Group Capital Management owns 1.79 million shares of Marchex Inc. (NASDAQ:MCHX) as of the end of the second quarter.
Let’s head to the next page of this article where we’ll reveal three other technology stocks favored by P.A.W. Capital Partners.