Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Avid Technology, Inc. (NASDAQ:AVID).
Is AVID a good stock to buy? Avid Technology, Inc. (NASDAQ:AVID) has seen a decrease in hedge fund interest in recent months. Avid Technology, Inc. (NASDAQ:AVID) was in 22 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 26. There were 26 hedge funds in our database with AVID positions at the end of the fourth quarter. Our calculations also showed that AVID isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a glance at the new hedge fund action regarding Avid Technology, Inc. (NASDAQ:AVID).
Do Hedge Funds Think AVID Is A Good Stock To Buy Now?
At Q1’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in AVID a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Impactive Capital was the largest shareholder of Avid Technology, Inc. (NASDAQ:AVID), with a stake worth $145.3 million reported as of the end of March. Trailing Impactive Capital was Royce & Associates, which amassed a stake valued at $41.7 million. Millennium Management, Rubric Capital Management, and Ophir Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Impactive Capital allocated the biggest weight to Avid Technology, Inc. (NASDAQ:AVID), around 17.98% of its 13F portfolio. Voss Capital is also relatively very bullish on the stock, earmarking 4.36 percent of its 13F equity portfolio to AVID.
Due to the fact that Avid Technology, Inc. (NASDAQ:AVID) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedgies that slashed their positions entirely heading into Q2. Intriguingly, Jeffrey Bronchick’s Cove Street Capital sold off the biggest investment of the “upper crust” of funds followed by Insider Monkey, comprising an estimated $13.3 million in stock, and Raymond J. Harbert’s Harbert Management was right behind this move, as the fund dropped about $5.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 4 funds heading into Q2.
Let’s also examine hedge fund activity in other stocks similar to Avid Technology, Inc. (NASDAQ:AVID). We will take a look at Cowen Inc. (NASDAQ:COWN), WisdomTree Investments, Inc. (NASDAQ:WETF), BellRing Brands, Inc. (NYSE:BRBR), Standard Motor Products, Inc. (NYSE:SMP), Smith & Wesson Brands, Inc. (NASDAQ:SWBI), ARMOUR Residential REIT, Inc. (NYSE:ARR), and Federal Agricultural Mortgage Corp. (NYSE:AGM). This group of stocks’ market values resemble AVID’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 15.4 hedge funds with bullish positions and the average amount invested in these stocks was $100 million. That figure was $320 million in AVID’s case. Cowen Inc. (NASDAQ:COWN) is the most popular stock in this table. On the other hand Federal Agricultural Mortgage Corp. (NYSE:AGM) is the least popular one with only 7 bullish hedge fund positions. Avid Technology, Inc. (NASDAQ:AVID) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AVID is 63.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Hedge funds were also right about betting on AVID as the stock returned 78.4% since the end of Q1 (through 7/16) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.