Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Brightcove Inc (NASDAQ:BCOV).
Is Brightcove Inc (NASDAQ:BCOV) a buy here? Money managers are getting less bullish. The number of long hedge fund bets fell by 4 recently. Our calculations also showed that bcov isn’t among the 30 most popular stocks among hedge funds. BCOV was in 14 hedge funds’ portfolios at the end of September. There were 18 hedge funds in our database with BCOV positions at the end of the previous quarter.
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 flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to check out the key hedge fund action encompassing Brightcove Inc (NASDAQ:BCOV).
How are hedge funds trading Brightcove Inc (NASDAQ:BCOV)?
Heading into the fourth quarter of 2018, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -22% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards BCOV over the last 13 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Jim Simons’s Renaissance Technologies has the number one position in Brightcove Inc (NASDAQ:BCOV), worth close to $19.6 million, comprising less than 0.1%% of its total 13F portfolio. Coming in second is Constantinos J. Christofilis of Archon Capital Management, with a $16.3 million position; 6.4% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism comprise Chet Kapoor’s Tenzing Global Investors, Douglas T. Granat’s Trigran Investments and David Brown’s Hawk Ridge Management.
Judging by the fact that Brightcove Inc (NASDAQ:BCOV) has witnessed falling interest from the aggregate hedge fund industry, we can see that there was a specific group of hedge funds that decided to sell off their full holdings last quarter. It’s worth mentioning that Richard Driehaus’s Driehaus Capital sold off the largest investment of all the hedgies watched by Insider Monkey, worth close to $1.2 million in stock, and Warren Lammert’s Granite Point Capital was right behind this move, as the fund dropped about $0.8 million worth. These moves are important to note, as total hedge fund interest was cut by 4 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Brightcove Inc (NASDAQ:BCOV). We will take a look at Moneygram International Inc (NASDAQ:MGI), Ramaco Resources, Inc. (NASDAQ:METC), SmartFinancial, Inc. (NASDAQ:SMBK), and BioTime, Inc. (NYSEAMEX:BTX). This group of stocks’ market caps are similar to BCOV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MGI | 20 | 32960 | 0 |
| METC | 9 | 15692 | 1 |
| SMBK | 4 | 22762 | -1 |
| BTX | 5 | 71152 | -3 |
| Average | 9.5 | 35642 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $96 million in BCOV’s case. Moneygram International Inc (NASDAQ:MGI) is the most popular stock in this table. On the other hand SmartFinancial, Inc. (NASDAQ:SMBK) is the least popular one with only 4 bullish hedge fund positions. Brightcove Inc (NASDAQ:BCOV) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MGI might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
