Immersion Corporation (IMMR): Are Hedge Funds Right About This Stock?

Is Immersion Corporation (NASDAQ:IMMR) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is Immersion Corporation (NASDAQ:IMMR) undervalued? Investors who are in the know are becoming less confident. The number of bullish hedge fund bets shrunk by 1 lately. Our calculations also showed that IMMR isn’t among the 30 most popular stocks among hedge funds.

To most traders, hedge funds are assumed to be worthless, outdated financial vehicles of years past. While there are more than 8,000 funds trading at present, We look at the aristocrats of this group, about 700 funds. Most estimates calculate that this group of people shepherd the majority of all hedge funds’ total asset base, and by paying attention to their best stock picks, Insider Monkey has figured out a number of investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by 6 percentage points a 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 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.

John Overdeck of Two Sigma

Let’s take a look at the key hedge fund action encompassing Immersion Corporation (NASDAQ:IMMR).

How are hedge funds trading Immersion Corporation (NASDAQ:IMMR)?

Heading into the fourth quarter of 2018, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in IMMR heading into this year. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

More specifically, Raging Capital Management was the largest shareholder of Immersion Corporation (NASDAQ:IMMR), with a stake worth $50.5 million reported as of the end of September. Trailing Raging Capital Management was Shannon River Fund Management, which amassed a stake valued at $15.8 million. GLG Partners, Rima Senvest Management, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.

No of Hedge Funds IMMR Positions

Since Immersion Corporation (NASDAQ:IMMR) has experienced declining sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of fund managers that decided to sell off their entire stakes by the end of the third quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management dropped the largest stake of the 700 funds tracked by Insider Monkey, totaling about $0.3 million in stock. Peter Algert and Kevin Coldiron’s fund, Algert Coldiron Investors, also sold off its stock, about $0.3 million worth. These transactions are important to note, as total hedge fund interest dropped by 1 funds by the end of the third quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Immersion Corporation (NASDAQ:IMMR) but similarly valued. We will take a look at Federated National Holding Co (NASDAQ:FNHC), Geron Corporation (NASDAQ:GERN), The Lovesac Company (NASDAQ:LOVE), and TriplePoint Venture Growth BDC Corp (NYSE:TPVG). This group of stocks’ market values are similar to IMMR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FNHC 8 42433 2
GERN 8 3819 0
LOVE 8 29145 1
TPVG 3 9099 1
Average 6.75 21124 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $102 million in IMMR’s case. Federated National Holding Co (NASDAQ:FNHC) is the most popular stock in this table. On the other hand TriplePoint Venture Growth BDC Corp (NYSE:TPVG) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Immersion Corporation (NASDAQ:IMMR) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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