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Is SeaChange International, Inc. (SEAC) A Good Stock To Buy?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider SeaChange International, Inc. (NASDAQ:SEAC) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

SeaChange International, Inc. (NASDAQ:SEAC) was in 7 hedge funds’ portfolios at the end of September. SEAC shareholders have witnessed a decrease in support from the world’s most elite money managers lately. There were 8 hedge funds in our database with SEAC holdings at the end of the previous quarter. Our calculations also showed that SEAC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Today there are many methods investors employ to grade publicly traded companies. Two of the most innovative methods are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the best investment managers can trounce their index-focused peers by a solid margin (see the details here).

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a peek at the fresh hedge fund action encompassing SeaChange International, Inc. (NASDAQ:SEAC).

How are hedge funds trading SeaChange International, Inc. (NASDAQ:SEAC)?

At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SEAC over the last 17 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Jim Roumell’s Roumell Asset Management has the largest position in SeaChange International, Inc. (NASDAQ:SEAC), worth close to $5.1 million, amounting to 11.9% of its total 13F portfolio. The second largest stake is Renaissance Technologies, with a $4.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions contain John Overdeck and David Siegel’s Two Sigma Advisors, Paul Marshall and Ian Wace’s Marshall Wace and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position Roumell Asset Management allocated the biggest weight to SeaChange International, Inc. (NASDAQ:SEAC), around 11.94% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, earmarking 0.0041 percent of its 13F equity portfolio to SEAC.

Seeing as SeaChange International, Inc. (NASDAQ:SEAC) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of hedgies that elected to cut their full holdings in the third quarter. Intriguingly, Cynthia Paul’s Lynrock Lake dropped the largest stake of the “upper crust” of funds watched by Insider Monkey, worth an estimated $2.9 million in stock, and Ken Grossman and Glen Schneider’s SG Capital Management was right behind this move, as the fund sold off about $0.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 1 funds in the third quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as SeaChange International, Inc. (NASDAQ:SEAC) but similarly valued. We will take a look at Concord Medical Services Holdings Limited (NYSE:CCM), InfuSystem Holdings, Inc. (NYSE:INFU), Everspin Technologies, Inc. (NASDAQ:MRAM), and Plumas Bancorp (NASDAQ:PLBC). All of these stocks’ market caps match SEAC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CCM 1 565 -1
INFU 3 13472 0
MRAM 5 7344 1
PLBC 1 234 0
Average 2.5 5404 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.5 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $10 million in SEAC’s case. Everspin Technologies, Inc. (NASDAQ:MRAM) is the most popular stock in this table. On the other hand Concord Medical Services Holdings Limited (NYSE:CCM) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks SeaChange International, Inc. (NASDAQ:SEAC) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on SEAC as the stock returned 21.5% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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