The elite funds run by legendary investors such as David Tepper and Dan Loeb make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don't follow. Because of their pay structures, they have strong incentives to do the research necessary to beat the market. That's why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at CEVA, Inc. (NASDAQ:CEVA) from the perspective of those elite funds.
CEVA, Inc. (NASDAQ:CEVA) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds' portfolios at the end of June. At the end of this article we will also compare CEVA to other stocks including Diamond S Shipping Inc. (NYSE:DSSI), Fossil Group Inc (NASDAQ:FOSL), and Magenta Therapeutics, Inc. (NASDAQ:MGTA) to get a better sense of its popularity. Our calculations also showed that CEVA isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are many methods stock traders put to use to analyze stocks. A couple of the best methods are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the best money managers can outclass the S&P 500 by a solid margin (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a gander at the new hedge fund action surrounding CEVA, Inc. (NASDAQ:CEVA).
How are hedge funds trading CEVA, Inc. (NASDAQ:CEVA)?
At the end of the second quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CEVA over the last 16 quarters. With hedgies' capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds, Millennium Management held the most valuable stake in CEVA, Inc. (NASDAQ:CEVA), which was worth $6.9 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $6 million worth of shares. Moreover, D E Shaw, Two Sigma Advisors, and Citadel Investment Group were also bullish on CEVA, Inc. (NASDAQ:CEVA), allocating a large percentage of their portfolios to this stock.
Due to the fact that CEVA, Inc. (NASDAQ:CEVA) has faced a decline in interest from the smart money, we can see that there exists a select few funds who were dropping their full holdings last quarter. Interestingly, Andrew Feldstein and Stephen Siderow's Blue Mountain Capital dropped the biggest investment of the 750 funds followed by Insider Monkey, worth an estimated $0.3 million in stock. Bruce Kovner's fund, Caxton Associates LP, also said goodbye to its stock, about $0.2 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks similar to CEVA, Inc. (NASDAQ:CEVA). We will take a look at Diamond S Shipping Inc. (NYSE:DSSI), Fossil Group Inc (NASDAQ:FOSL), Magenta Therapeutics, Inc. (NASDAQ:MGTA), and Akebia Therapeutics Inc (NASDAQ:AKBA). This group of stocks' market caps resemble CEVA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DSSI,11,149769,4 FOSL,13,66559,-4 MGTA,8,72421,0 AKBA,14,194634,-5 Average,11.5,120846,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $121 million. That figure was $26 million in CEVA's case. Akebia Therapeutics Inc (NASDAQ:AKBA) is the most popular stock in this table. On the other hand Magenta Therapeutics, Inc. (NASDAQ:MGTA) is the least popular one with only 8 bullish hedge fund positions. CEVA, Inc. (NASDAQ:CEVA) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on CEVA as the stock returned 22.6% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.