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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Smith Micro Software, Inc. (NASDAQ:SMSI) based on those filings.
Is Smith Micro Software, Inc. (NASDAQ:SMSI) a buy here? The smart money is in an optimistic mood. The number of bullish hedge fund positions advanced by 1 recently. Our calculations also showed that SMSI isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). SMSI was in 9 hedge funds' portfolios at the end of the first quarter of 2020. There were 8 hedge funds in our database with SMSI holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are dozens of signals stock traders can use to assess stocks. A couple of the most innovative signals are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can outperform the broader indices by a very impressive amount (see the details here).
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Paul Marshall of Marshall Wace[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a gander at the recent hedge fund action regarding Smith Micro Software, Inc. (NASDAQ:SMSI).
How have hedgies been trading Smith Micro Software, Inc. (NASDAQ:SMSI)?
At the end of the first quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in SMSI over the last 18 quarters. So, let's examine 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, Israel Englander's Millennium Management has the most valuable position in Smith Micro Software, Inc. (NASDAQ:SMSI), worth close to $2.2 million, comprising less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Marshall Wace LLP, led by Paul Marshall and Ian Wace, holding a $1.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions comprise Ken Griffin's Citadel Investment Group, Renaissance Technologies and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Ancora Advisors allocated the biggest weight to Smith Micro Software, Inc. (NASDAQ:SMSI), around 0.02% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to SMSI.
As one would reasonably expect, key money managers were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the most outsized position in Smith Micro Software, Inc. (NASDAQ:SMSI). Marshall Wace LLP had $1.1 million invested in the company at the end of the quarter. Frederick DiSanto's Ancora Advisors also initiated a $0.4 million position during the quarter. The following funds were also among the new SMSI investors: Thomas Bailard's Bailard Inc, Louis Navellier's Navellier & Associates, and Donald Sussman's Paloma Partners.
Let's now review hedge fund activity in other stocks similar to Smith Micro Software, Inc. (NASDAQ:SMSI). These stocks are Central Valley Community Bancorp (NASDAQ:CVCY), Kezar Life Sciences, Inc. (NASDAQ:KZR), Digimarc Corp (NASDAQ:DMRC), and Net 1 UEPS Technologies Inc (NASDAQ:UEPS). All of these stocks' market caps are similar to SMSI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CVCY,5,3864,-2 KZR,8,13895,0 DMRC,6,10350,2 UEPS,16,48920,1 Average,8.75,19257,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $5 million in SMSI's case. Net 1 UEPS Technologies Inc (NASDAQ:UEPS) is the most popular stock in this table. On the other hand Central Valley Community Bancorp (NASDAQ:CVCY) is the least popular one with only 5 bullish hedge fund positions. Smith Micro Software, Inc. (NASDAQ:SMSI) 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. 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 but beat the market by 15.9 percentage points. Unfortunately SMSI wasn't nearly as popular as these 10 stocks and hedge funds that were betting on SMSI were disappointed as the stock returned 9.5% during the same time period 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.