MINDBODY Inc (MB): Are Hedge Funds Right About This Stock?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in MINDBODY Inc (NASDAQ:MB) .

MINDBODY Inc (NASDAQ:MB) has experienced an increase in enthusiasm from smart money of late. MB was in 20 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with MB positions at the end of the previous quarter. 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 Dime Community Bancshares, Inc. (NASDAQ:DCOM), JinkoSolar Holding Co., Ltd. (NYSE:JKS), and Lattice Semiconductor (NASDAQ:LSCC) to gather more data points.

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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.

everything possible/Shutterstock.com

everything possible/Shutterstock.com

What does the smart money think about MINDBODY Inc (NASDAQ:MB)?

At Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a gain of 67% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MB over the last 5 quarters. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Colin Moran’s Abdiel Capital Advisors has the largest position in MINDBODY Inc (NASDAQ:MB), worth close to $69.1 million, accounting for 20.3% of its total 13F portfolio. On Abdiel Capital Advisors’s heels is Alexander Captain of Cat Rock Capital, with a $12.8 million position; 7% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that hold long positions contain Jim Simons’ Renaissance Technologies, Christian Leone’s Luxor Capital Group and Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors. We should note that Cat Rock Capital is 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.

As industrywide interest jumped, some big names have jumped into MINDBODY Inc (NASDAQ:MB) headfirst. Luxor Capital Group, led by Christian Leone, established the most outsized position in MINDBODY Inc (NASDAQ:MB). Luxor Capital Group had $6.5 million invested in the company at the end of the quarter. Bruce Garelick’s Garelick Capital Partners also made a $4.3 million investment in the stock during the quarter. The following funds were also among the new MB investors: Brian Ashford-Russell and Tim Woolley’s Polar Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Warren Lammert’s Granite Point Capital.

Let’s go over hedge fund activity in other stocks similar to MINDBODY Inc (NASDAQ:MB). We will take a look at Dime Community Bancshares, Inc. (NASDAQ:DCOM), JinkoSolar Holding Co., Ltd. (NYSE:JKS), Lattice Semiconductor (NASDAQ:LSCC), and MGP Ingredients Inc (NASDAQ:MGPI). All of these stocks’ market caps are similar to MB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DCOM 8 33018 0
JKS 5 12522 1
LSCC 11 24582 6
MGPI 8 53307 1

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $31 million. That figure was $136 million in MB’s case. Lattice Semiconductor (NASDAQ:LSCC) is the most popular stock in this table. On the other hand JinkoSolar Holding Co., Ltd. (NYSE:JKS) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks MINDBODY Inc (NASDAQ:MB) 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.

Disclosure: None