What Hedge Funds Think about ChannelAdvisor Corp (ECOM)?

Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: ChannelAdvisor Corp (NYSE:ECOM).

ChannelAdvisor Corp (NYSE:ECOM) shareholders have witnessed an increase in hedge fund interest last quarter. There were 10 hedge funds in our database with ECOM positions at the end of September. 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 Pacific Continental Corporation (NASDAQ:PCBK), Aratana Therapeutics Inc (NASDAQ:PETX), and United Community Financial Corp (NASDAQ:UCFC) to gather more data points.

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.

With all of this in mind, let’s view the latest action surrounding ChannelAdvisor Corp (NYSE:ECOM).

Hedge fund activity in ChannelAdvisor Corp (NYSE:ECOM)

At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, up by 11% from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in ECOM at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, D E Shaw, one of the biggest hedge funds in the world, holds the biggest position in ChannelAdvisor Corp (NYSE:ECOM). D E Shaw has a $6.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Israel Englander’s Millennium Management, with a $2.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish contain Jim Simons’ Renaissance Technologies, Josh Goldberg’s G2 Investment Partners Management, and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that none of these hedge funds are 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 one would reasonably expect, some big names have jumped into ChannelAdvisor Corp (NYSE:ECOM) headfirst. Highbridge Capital Management, led by Glenn Russell Dubin, initiated the largest position in ChannelAdvisor Corp (NYSE:ECOM). Highbridge Capital Management had $0.2 million invested in the company at the end of the quarter. Philip Hempleman’s Ardsley Partners also made a $0.2 million investment in the stock during the quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as ChannelAdvisor Corp (NYSE:ECOM) but similarly valued. We will take a look at Pacific Continental Corporation (NASDAQ:PCBK), Aratana Therapeutics Inc (NASDAQ:PETX), United Community Financial Corp (NASDAQ:UCFC), and Kadmon Holdings Inc (NYSE:KDMN). This group of stocks’ market values are closest to ECOM’s market value.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $14 million in ECOM’s case. Aratana Therapeutics Inc (NASDAQ:PETX) is the most popular stock in this table. On the other hand Pacific Continental Corporation (NASDAQ:PCBK) is the least popular one with only five bullish hedge fund positions. ChannelAdvisor Corp (NYSE:ECOM) is not the least popular stock in this group and hedge fund is in-line with the average value. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PETX might be a better candidate to consider taking a long position in.

Disclosure: None