Hedge Fund Sentiment Cautiously Watching Brightcove Inc (BCOV)
In this article you are going to find out whether hedge funds think Brightcove Inc (NASDAQ:BCOV) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Brightcove Inc (NASDAQ:BCOV) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 18 hedge funds' portfolios at the end of March. At the end of this article we will also compare BCOV to other stocks including Cytosorbents Corp (NASDAQ:CTSO), Bar Harbor Bankshares (NYSE:BHB), and Northern Oil & Gas, Inc. (NYSE:NOG) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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David E. Shaw of D.E. Shaw[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a gander at the new hedge fund action surrounding Brightcove Inc (NASDAQ:BCOV).
What does smart money think about Brightcove Inc (NASDAQ:BCOV)?
Heading into the second quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in BCOV a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Trigran Investments held the most valuable stake in Brightcove Inc (NASDAQ:BCOV), which was worth $28.4 million at the end of the third quarter. On the second spot was Tenzing Global Investors which amassed $26.1 million worth of shares. Archon Capital Management, Renaissance Technologies, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Tenzing Global Investors allocated the biggest weight to Brightcove Inc (NASDAQ:BCOV), around 14.43% of its 13F portfolio. Archon Capital Management is also relatively very bullish on the stock, setting aside 7.06 percent of its 13F equity portfolio to BCOV.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Weld Capital Management. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Engineers Gate Manager).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Brightcove Inc (NASDAQ:BCOV) but similarly valued. These stocks are Cytosorbents Corp (NASDAQ:CTSO), Bar Harbor Bankshares (NYSE:BHB), Northern Oil & Gas, Inc. (NYSE:NOG), and West Bancorporation, Inc. (NASDAQ:WTBA). This group of stocks' market caps match BCOV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CTSO,9,12459,4 BHB,4,6485,-1 NOG,12,33650,-9 WTBA,4,7660,-2 Average,7.25,15064,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $102 million in BCOV's case. Northern Oil & Gas, Inc. (NYSE:NOG) is the most popular stock in this table. On the other hand Bar Harbor Bankshares (NYSE:BHB) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Brightcove Inc (NASDAQ:BCOV) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. Unfortunately BCOV wasn't nearly as popular as these 10 stocks and hedge funds that were betting on BCOV were disappointed as the stock returned 12.5% during the second quarter (through June 22nd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
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