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

Since SeaChange International (NASDAQ:SEAC) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of hedge funds who were dropping their full holdings by the end of the third quarter. Intriguingly, Glenn W. Welling’s Engaged Capital said goodbye to the largest stake of the “upper crust” of funds monitored by Insider Monkey, valued at about $3.7 million in stock. Mark Coe’s fund, Coe Capital Management, also sold off its stock, about $0.8 million worth. These moves are interesting, as total hedge fund interest dropped by 3 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as SeaChange International (NASDAQ:SEAC) but similarly valued. These stocks are FreightCar America, Inc. (NASDAQ:RAIL), Avalanche Biotechnologies Inc (NASDAQ:AAVL), Sparton Corporation (NYSE:SPA), and Johnson Outdoors Inc. (NASDAQ:JOUT). This group of stocks’ market values are similar to SEAC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RAIL 14 13360 3
AAVL 19 54524 -3
SPA 6 20340 -1
JOUT 4 4296 -1

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $23 million, which is lower than the $50 million in SEAC’s case. Avalanche Biotechnologies Inc (NASDAQ:AAVL) is the most popular stock in this table, while Johnson Outdoors Inc. (NASDAQ:JOUT) is the least popular one with only 4 bullish hedge fund positions. By comparison, SeaChange International (NASDAQ:SEAC) registers a hedge fund interest close to the average. However, we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AAVL might be a better candidate to consider a long position.

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