Is DSP Group, Inc. (NASDAQ:DSPG) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
DSP Group, Inc. (NASDAQ:DSPG) has experienced an increase in activity from the world's largest hedge funds in recent months. DSPG was in 11 hedge funds' portfolios at the end of September. There were 10 hedge funds in our database with DSPG positions at the end of the previous quarter. Our calculations also showed that DSPG isn't among the 30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a look at the key hedge fund action encompassing DSP Group, Inc. (NASDAQ:DSPG).
How are hedge funds trading DSP Group, Inc. (NASDAQ:DSPG)?
Heading into the fourth quarter of 2018, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards DSPG over the last 13 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, William C. Martin's Raging Capital Management has the biggest position in DSP Group, Inc. (NASDAQ:DSPG), worth close to $25.9 million, accounting for 4.6% of its total 13F portfolio. The second most bullish fund manager is Rima Senvest Management, managed by Richard Mashaal, which holds a $20.9 million position; 1.6% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions consist of Jim Simons's Renaissance Technologies, Israel Englander's Millennium Management and D. E. Shaw's D E Shaw.
There weren't any hedge funds initiating brand new positions in the stock during the third quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as DSP Group, Inc. (NASDAQ:DSPG) but similarly valued. We will take a look at IMV Inc. (NASDAQ:IMV), EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT), Mitek Systems, Inc. (NASDAQ:MITK), and Ocular Therapeutix Inc (NASDAQ:OCUL). This group of stocks' market values resemble DSPG's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IMV,1,158,0 EYPT,3,4067,0 MITK,12,18745,1 OCUL,8,14480,4 Average,6,9363,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $68 million in DSPG's case. Mitek Systems, Inc. (NASDAQ:MITK) is the most popular stock in this table. On the other hand IMV Inc. (NASDAQ:IMV) is the least popular one with only 1 bullish hedge fund positions. DSP Group, Inc. (NASDAQ:DSPG) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. In this regard MITK might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.