Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. That’s why we pay special attention to hedge fund activity in these stocks.
Is Covisint Corp (NASDAQ:COVS) ready to rally soon? The best stock pickers are getting less optimistic. The number of long hedge fund bets were trimmed by 4 in recent months. COVS was in 8 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with COVS 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 The McClatchy Company (NYSE:MNI), Tenax Therapeutics Inc (NASDAQ:TENX), and KEMET Corporation (NYSE:KEM) to gather more data points.
To the average investor there are a multitude of indicators stock market investors put to use to assess publicly traded companies. Two of the most underrated indicators are hedge fund and insider trading signals. our researchers have shown that, historically, those who follow the top picks of the elite investment managers can trounce the broader indices by a significant amount (see the details here).
With all of this in mind, we’re going to check out the recent action encompassing Covisint Corp (NASDAQ:COVS).
How are hedge funds trading Covisint Corp (NASDAQ:COVS)?
Heading into Q4, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Paul Singer’s Elliott Management has the biggest position in Covisint Corp (NASDAQ:COVS), worth close to $6.3 million, comprising 0.1% of its total 13F portfolio. The second most bullish fund manager is Portolan Capital Management, managed by George McCabe, which holds an $6.3 million position; 0.8% of its 13F portfolio is allocated to the company. The remaining members of the smart money that are bullish include Jim Roumell’s Roumell Asset Management, John Fichthorn’s Dialectic Capital Management and Jim Simons’s Renaissance Technologies.
Because Covisint Corp (NASDAQ:COVS) has witnessed a declination in interest from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of money managers that elected to cut their entire stakes by the end of the third quarter. Interestingly, Ken Griffin’s Citadel Investment Group dumped the largest position of the 700 funds tracked by Insider Monkey, totaling close to $0.2 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also said goodbye to its stock, about $0.1 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 4 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Covisint Corp (NASDAQ:COVS) but similarly valued. We will take a look at The McClatchy Company (NYSE:MNI), Tenax Therapeutics Inc (NASDAQ:TENX), KEMET Corporation (NYSE:KEM), and MAM Software Group Inc. (NASDAQ:MAMS). All of these stocks’ market caps are similar to COVS’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 9 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. Among the stocks from the table, KEMET Corporation (NYSE:KEM) is the most popular, with 12 funds reporting stakes. On the other hand MAM Software Group Inc. (NASDAQ:MAMS) is the least popular one with only 4 bullish hedge fund positions. Covisint Corp (NASDAQ:COVS) is not the least popular stock in this group but hedge fund interest is still below average. Moreover, hedge funds have amassed $22 million worth of its stock heading into the fourth quarter. However, we’d rather spend our time researching stocks that hedge funds are piling on and, in this regard, KEM might be a better candidate to consider looking into.