Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze Marchex, Inc. (NASDAQ:MCHX) from the perspective of those successful funds.
Marchex, Inc. (NASDAQ:MCHX) has seen a decrease in activity from the world’s largest hedge funds in recent months. MCHX was in 6 hedge funds’ portfolios at the end of September. There were 10 hedge funds in our database with MCHX holdings at the end of June. At the end of this article we will also compare MCHX to other stocks including Entegra Financial Corp (NASDAQ:ENFC), Community Bankers Trust Corp. (NASDAQ:ESXB), and Unique Fabricating Inc (NYSEMKT:UFAB) to get a better sense of its popularity.
Follow Marchex Inc (NASDAQ:MCHX)
Follow Marchex Inc (NASDAQ:MCHX)
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.
Hedge fund activity in Marchex, Inc. (NASDAQ:MCHX)
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a 40% fall from the previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in MCHX at the beginning of this year, which shows an even greater fall in 2016. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Phil Frohlich’s Prescott Group Capital Management has the biggest position in Marchex, Inc. (NASDAQ:MCHX), worth close to $11.2 million, comprising 2.4% of its total 13F portfolio. Coming in second is P.A.W. CAPITAL PARTNERS, led by Peter A. Wright, which holds a $3.3 million position; 3.6% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions contain Renaissance Technologies, one of the largest hedge funds in the world, Joseph Mathias’ Concourse Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors. 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-micro-cap stocks.
Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that dumped their entire stakes in the stock during the third quarter. It’s worth mentioning that Constantinos J. Christofilis’ Archon Capital Management dumped the largest stake of all the investors studied by Insider Monkey, totaling an estimated $6.8 million in stock, and Chuck Royce’s Royce & Associates was right behind this move, as the fund dropped about $0.3 million worth of shares.
Let’s also examine hedge fund activity in other stocks similar to Marchex, Inc. (NASDAQ:MCHX). We will take a look at Entegra Financial Corp (NASDAQ:ENFC), Community Bankers Trust Corp. (NASDAQ:ESXB), Unique Fabricating Inc (NYSEMKT:UFAB), and Wheeler Real Estate Investment Trust Inc (NASDAQ:WHLR). This group of stocks’ market caps match MCHX’s market cap.
|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 7 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $18 million in MCHX’s case. Wheeler Real Estate Investment Trust Inc (NASDAQ:WHLR) is the most popular stock in this table. On the other hand Community Bankers Trust Corp. (NASDAQ:ESXB) is the least popular one with only 5 bullish hedge fund positions. Marchex, Inc. (NASDAQ:MCHX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard WHLR might be a better candidate to consider taking a long position in.