Jeffrey Bronchick’s Cove Street Capital, Matthew Drapkin and Steven R. Becker’s Northern Right Capital Management, and J. Carlo Cannell’s Cannell Capital have disclosed their latest moves involving three companies: Avid Technology Inc. (NASDAQ:AVID), EMCORE Corporation (NASDAQ:EMKR), and EVINE Live Inc (NASDAQ:EVLV), respectively, in three separate filings with the U.S. Securities and Exchange Commission. Cove Street Capital reported increasing its stake in Avid Technology, while Northern Right Capital Management disclosed cutting its position in EMCORE Corporation. In addition, Cannell Capital revealed a letter it sent to EVINE Live’s Chief Executive Officer (CEO) and Director Mark C. Bozek. We’ll discuss all of these moves in more details below.
We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 102% since then and outperformed the S&P 500 Index by around 53 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.
First, let’s take a look at Cove Street Capital’s move in Avid Technology Inc. (NASDAQ:AVID). The fund has increased its holding to 2.14 million shares compared to 1.92 million shares held at the end of September. The stake currently represents 5.4% of the company’s outstanding common stock. Avid Technology is a $283.64-million technology company, which provides software and systems for the creation of digital media content. The company did not post impressive results for the third quarter, with its operating income dropping to $14.41 million, versus $15.06 million in the same quarter a year ago. Revenue slipped to $137.4 million, compared to $142.4 million a year earlier. According to the company, its paid subscribers exceeded 20,000 users. Hedge fund interest in Avid Technology Inc. (NASDAQ:AVID)’s shares was flat at the end of the third quarter. A total of 19 hedge funds we track were bullish on this stock, while the total value of their holdings slid to $104.22 million at the end of September from $174.50 million a quarter earlier. Aside from Cove Street Capital, Richard Blum’s Blum Capital Partners holds 6.88 million shares of Avid Technology as of the end of September.
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On the next page, we’ll be talking about the latest moves of Northern Right Capital Management and Cannell Capital.