There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other successful funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Lionbridge Technologies, Inc. (NASDAQ:LIOX)
Hedge fund interest in Lionbridge Technologies, Inc. (NASDAQ:LIOX) shares was flat at the end of last quarter. This is not usually a positive indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Novan Inc (NASDAQ:NOVN), Aerohive Networks Inc (NYSE:HIVE), and Bank of Marin Bancorp (NASDAQ:BMRC) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
With all of this in mind, we’re going to analyze the recent action regarding Lionbridge Technologies, Inc. (NASDAQ:LIOX).
How have hedgies been trading Lionbridge Technologies, Inc. (NASDAQ:LIOX)?
At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in LIOX at the beginning of this year. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Glenhill Advisors, led by Glenn J. Krevlin, holds the biggest position in Lionbridge Technologies, Inc. (NASDAQ:LIOX). According to regulatory filings, the fund has a $42 million position in the stock, comprising 2.5% of its 13F portfolio. Coming in second is Gregory Summe of Glen Capital Partners, with an $18.2 million position; the fund has 24.6% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions include Jim Simons’s Renaissance Technologies, D. E. Shaw’s D E Shaw and Phil Frohlich’s Prescott Group Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Our database shows that there wasn’t a lot of activity in the stock though Ken Griffin’s Citadel Investment Group got rid of about $0.1 million in stock. Matthew Hulsizer’s fund, PEAK6 Capital Management, also dumped its call options, worth about $0.1 million. On the other side of this transaction was probably Mark Coe’s Coe Capital that initiated a $1.3 million long position.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Lionbridge Technologies, Inc. (NASDAQ:LIOX) but similarly valued. We will take a look at Novan Inc (NASDAQ:NOVN), Aerohive Networks Inc (NYSE:HIVE), Bank of Marin Bancorp (NASDAQ:BMRC), and Plug Power Inc (NASDAQ:PLUG). This group of stocks’ market valuations are closest to LIOX’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $72 million in LIOX’s case. Aerohive Networks Inc (NYSE:HIVE) is the most popular stock in this table. On the other hand Plug Power Inc (NASDAQ:PLUG) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Lionbridge Technologies, Inc. (NASDAQ:LIOX) 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.