Should You Buy Avid Technology, Inc. (AVID)?

It was a rough third quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 7% during the quarter. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by about 14 percentage points between June 25 and October 30, as investors fled less-known quantities for safe havens. This was the case with hedge funds, who we heard were pulling money from the market amid the volatility, which included money from small-cap stocks, which they invest in at a higher rate than other investors. This action contributed to the greater decline in these stocks during the tumultuous period. We will study how this market volatility affected their sentiment towards Avid Technology, Inc. (NASDAQ:AVID) during the quarter below.

Hedge fund interest in Avid Technology, Inc. (NASDAQ:AVID) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare AVID to other stocks including National Storage Affiliates Trust (NYSE:NSA), Phoenix New Media Ltd ADR (NYSE:FENG), and Whitestone REIT (NYSE:WSR) to get a better sense of its popularity.

Follow Avid Technology Inc. (NASDAQ:AVID)

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With all of this in mind, let’s take a look at the fresh action surrounding Avid Technology, Inc. (NASDAQ:AVID).

What have hedge funds been doing with Avid Technology, Inc. (NASDAQ:AVID)?

At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Blum Capital Partners, managed by Richard Blum, holds the number one position in Avid Technology, Inc. (NASDAQ:AVID). Blum Capital Partners has a $54.7 million position in the stock, comprising 29.1% of its 13F portfolio. The second largest stake is held by Cove Street Capital, managed by Jeffrey Bronchick, which holds a $15.3 million position; 2% of its 13F portfolio is allocated to the stock. Some other peers that are bullish comprise Brett Hendrickson’s Nokomis Capital, Chuck Royce’s Royce & Associates and J. Carlo Cannell’s Cannell Capital.

It’s worth mentioning that Israel Englander’s Millennium Management cut the largest stake of all the hedgies monitored by Insider Monkey, worth about $2.3 million in stock, and Amy Minella’s Cardinal Capital was right behind this move, as the fund cut about $1.4 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Avid Technology, Inc. (NASDAQ:AVID) but similarly valued. We will take a look at National Storage Affiliates Trust (NYSE:NSA), Phoenix New Media Ltd ADR (NYSE:FENG), Whitestone REIT (NYSE:WSR), and NanoString Technologies Inc (NASDAQ:NSTG). This group of stocks’ market valuations are closest to AVID’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NSA 11 85632 4
FENG 5 21107 -2
WSR 9 13150 1
NSTG 11 91320 0

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was $104 million in AVID’s case. National Storage Affiliates Trust (NYSE:NSA) is the most popular stock in this table. On the other hand Phoenix New Media Ltd ADR (NYSE:FENG) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Avid Technology, Inc. (NASDAQ:AVID) 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.