Should I Avoid Brightcove Inc (BCOV)?

In this article you are going to find out whether hedge funds think Brightcove Inc (NASDAQ:BCOV) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Brightcove Inc (NASDAQ:BCOV) investors should be aware of a decrease in support from the world’s most elite money managers recently. Brightcove Inc (NASDAQ:BCOV) was in 21 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 22. Our calculations also showed that BCOV isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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Richard Driehaus of Driehaus Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to take a glance at the fresh hedge fund action encompassing Brightcove Inc (NASDAQ:BCOV).

Do Hedge Funds Think BCOV Is A Good Stock To Buy Now?

At the end of March, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from one quarter earlier. On the other hand, there were a total of 18 hedge funds with a bullish position in BCOV a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Is BCOV A Good Stock To Buy?

Among these funds, Tenzing Global Investors held the most valuable stake in Brightcove Inc (NASDAQ:BCOV), which was worth $80.5 million at the end of the fourth quarter. On the second spot was Trigran Investments which amassed $58 million worth of shares. Archon Capital Management, Renaissance Technologies, and Driehaus Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Tenzing Global Investors allocated the biggest weight to Brightcove Inc (NASDAQ:BCOV), around 25.8% of its 13F portfolio. Archon Capital Management is also relatively very bullish on the stock, dishing out 7.37 percent of its 13F equity portfolio to BCOV.

Because Brightcove Inc (NASDAQ:BCOV) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of funds who sold off their positions entirely by the end of the first quarter. Interestingly, Christopher Hillary’s Roubaix Capital sold off the biggest investment of the “upper crust” of funds followed by Insider Monkey, comprising about $2.3 million in stock. Roger Ibbotson’s fund, Zebra Capital Management, also cut its stock, about $0.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 1 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks similar to Brightcove Inc (NASDAQ:BCOV). We will take a look at ADTRAN, Inc. (NASDAQ:ADTN), Organigram Holdings Inc. (NASDAQ:OGI), Boston Omaha Corporation (NASDAQ:BOMN), Franks International NV (NYSE:FI), Varex Imaging Corporation (NASDAQ:VREX), Blucora Inc (NASDAQ:BCOR), and ACCO Brands Corporation (NYSE:ACCO). This group of stocks’ market caps resemble BCOV’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ADTN 10 75318 -1
OGI 9 15213 5
BOMN 2 301026 -1
FI 9 7836 0
VREX 22 114801 3
BCOR 14 150015 -2
ACCO 15 46233 -2
Average 11.6 101492 0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $101 million. That figure was $292 million in BCOV’s case. Varex Imaging Corporation (NASDAQ:VREX) is the most popular stock in this table. On the other hand Boston Omaha Corporation (NASDAQ:BOMN) is the least popular one with only 2 bullish hedge fund positions. Brightcove Inc (NASDAQ:BCOV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BCOV is 80.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately BCOV wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BCOV were disappointed as the stock returned -36.1% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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