Hedge Funds Are Selling Mitek Systems, Inc. (MITK)
In this article we will check out the progression of hedge fund sentiment towards Mitek Systems, Inc. (NASDAQ:MITK) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ 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.
Is Mitek Systems, Inc. (NASDAQ:MITK) ready to rally soon? The best stock pickers are becoming less confident. The number of bullish hedge fund positions fell by 2 recently. Our calculations also showed that MITK 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).
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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Bruce Kovner of Caxton Associates LP[/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. Now we're going to take a glance at the key hedge fund action regarding Mitek Systems, Inc. (NASDAQ:MITK).
How have hedgies been trading Mitek Systems, Inc. (NASDAQ:MITK)?
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the fourth quarter of 2019. By comparison, 21 hedge funds held shares or bullish call options in MITK a year ago. So, let's review 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, Stephen Perkins's Toronado Partners has the largest position in Mitek Systems, Inc. (NASDAQ:MITK), worth close to $15 million, amounting to 4.7% of its total 13F portfolio. The second most bullish fund manager is Blue Grotto Capital, managed by Ben Gordon, which holds a $11.6 million position; 8.5% of its 13F portfolio is allocated to the stock. Some other professional money managers with similar optimism encompass Constantinos J. Christofilis's Archon Capital Management, C. Jonathan Gattman's Cloverdale Capital Management and Peter A. Wright's P.A.W. CAPITAL PARTNERS. In terms of the portfolio weights assigned to each position Blue Grotto Capital allocated the biggest weight to Mitek Systems, Inc. (NASDAQ:MITK), around 8.49% of its 13F portfolio. Cloverdale Capital Management is also relatively very bullish on the stock, dishing out 8.01 percent of its 13F equity portfolio to MITK.
Due to the fact that Mitek Systems, Inc. (NASDAQ:MITK) has witnessed bearish sentiment from the smart money, we can see that there is a sect of hedgies that decided to sell off their positions entirely last quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital said goodbye to the largest stake of the 750 funds watched by Insider Monkey, worth close to $0.9 million in stock. Josh Goldberg's fund, G2 Investment Partners Management, also said goodbye to its stock, about $0.4 million worth. These transactions are important to note, as total hedge fund interest dropped by 2 funds last quarter.
Let's check out hedge fund activity in other stocks similar to Mitek Systems, Inc. (NASDAQ:MITK). These stocks are Surgery Partners, Inc. (NASDAQ:SGRY), Dorchester Minerals LP (NASDAQ:DMLP), HCI Group Inc (NYSE:HCI), and Lizhi Inc. (NASDAQ:LIZI). All of these stocks' market caps resemble MITK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SGRY,10,30221,-1 DMLP,6,15276,1 HCI,10,21739,0 LIZI,1,355,1 Average,6.75,16898,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $63 million in MITK's case. Surgery Partners, Inc. (NASDAQ:SGRY) is the most popular stock in this table. On the other hand Lizhi Inc. (NASDAQ:LIZI) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Mitek Systems, Inc. (NASDAQ:MITK) 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 but still managed to beat the market by 15.9 percentage points. Hedge funds were also right about betting on MITK, though not to the same extent, as the stock returned 23.5% in Q2 (through June 22nd) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
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