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Should You Buy ModusLink Global Solutions, Inc. (MLNK)?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow over 700 of the best-performing investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is ModusLink Global Solutions, Inc. (NASDAQ:MLNK), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

ModusLink Global Solutions, Inc. (NASDAQ:MLNK) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 11 hedge funds’ portfolios at the end of the third quarter of 2015. 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 Harmony Merger Corp (NASDAQ:HRMN), magicJack VocalTec Ltd (NASDAQ:CALL), and Planet Payment Inc (NASDAQ:PLPM) to gather more data points.

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To most shareholders, hedge funds are perceived as worthless, outdated financial vehicles of the past. While there are greater than 8000 funds with their doors open at present, Our experts hone in on the aristocrats of this group, approximately 700 funds. These investment experts shepherd the majority of the hedge fund industry’s total capital, and by following their finest equity investments, Insider Monkey has uncovered numerous investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points annually for a decade in their back tests.

With all of this in mind, we’re going to take a look at the key action surrounding ModusLink Global Solutions, Inc. (NASDAQ:MLNK).

How are hedge funds trading ModusLink Global Solutions, Inc. (NASDAQ:MLNK)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Steel Partners, managed by Warren Lichtenstein, holds the largest position in ModusLink Global Solutions, Inc. (NASDAQ:MLNK). Steel Partners has an $47.1 million position in the stock, comprising 7.6% of its 13F portfolio. Coming in second is MAST Capital, managed by David Steinberg, which holds an $7.4 million position; the fund has 10.7% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions consist of Jim Simons’ Renaissance Technologies, Ross Berman’s Green Owl Capital Management, and Mario Gabelli’s GAMCO Investors.

Due to the fact that ModusLink Global Solutions, Inc. (NASDAQ:MLNK) has experienced falling interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of money managers that decided to sell off their positions entirely heading into Q4. At the top of the heap, Noah Levy and Eugene Dozortsev’s Newtyn Management sold off the largest stake of all the hedgies watched by Insider Monkey, valued at an estimated $0.7 million in stock. Chao Ku’s fund, Nine Chapters Capital Management, also said goodbye to its stock, about $0 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ModusLink Global Solutions, Inc. (NASDAQ:MLNK) but similarly valued. We will take a look at Harmony Merger Corp (NASDAQ:HRMN), magicJack VocalTec Ltd (NASDAQ:CALL), Planet Payment Inc (NASDAQ:PLPM), and RealNetworks Inc (NASDAQ:RNWK). All of these stocks’ market caps are similar to MLNK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HRMN 4 17719 1
CALL 9 11341 0
PLPM 10 4986 4
RNWK 8 37260 -3

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 $18 million. That figure was $61 million in MLNK’s case. Planet Payment Inc (NASDAQ:PLPM) is the most popular stock in this table, while Harmony Merger Corp (NASDAQ:HRMN) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks ModusLink Global Solutions, Inc. (NASDAQ:MLNK) 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.

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