Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients' money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space. Nevertheless, it is also possible to identify cheap large cap stocks by following the footsteps of best performing hedge funds.
AudioCodes Ltd. (NASDAQ:AUDC) has experienced a decrease in hedge fund sentiment recently. Our calculations also showed that AUDC 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.
To most stock holders, hedge funds are perceived as worthless, outdated investment tools of years past. While there are more than 8000 funds in operation at present, Our experts choose to focus on the crème de la crème of this club, around 750 funds. These investment experts command bulk of all hedge funds' total capital, and by watching their top picks, Insider Monkey has revealed a number of investment strategies that have historically defeated the market. Insider Monkey's flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
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. We're going to view the recent hedge fund action encompassing AudioCodes Ltd. (NASDAQ:AUDC).
What have hedge funds been doing with AudioCodes Ltd. (NASDAQ:AUDC)?
At Q2's end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -21% from the previous quarter. On the other hand, there were a total of 5 hedge funds with a bullish position in AUDC a year ago. So, let's find out 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, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital has the most valuable position in AudioCodes Ltd. (NASDAQ:AUDC), worth close to $6.2 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is held by G2 Investment Partners Management, managed by Josh Goldberg, which holds a $5.6 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Other peers that hold long positions encompass Louis Navellier's Navellier & Associates, D. E. Shaw's D E Shaw and Mark Broach's Manatuck Hill Partners.
Since AudioCodes Ltd. (NASDAQ:AUDC) has faced a decline in interest from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of hedge funds that elected to cut their entire stakes heading into Q3. It's worth mentioning that Renaissance Technologies said goodbye to the biggest investment of the 750 funds tracked by Insider Monkey, totaling about $1.6 million in stock. Israel Englander's fund, Millennium Management, also dumped its stock, about $0.5 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 3 funds heading into Q3.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as AudioCodes Ltd. (NASDAQ:AUDC) but similarly valued. These stocks are Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP), 111, Inc. (NASDAQ:YI), Golden Star Resources Ltd. (NYSE:GSS), and Old Line Bancshares, Inc. (NASDAQ:OLBK). All of these stocks' market caps match AUDC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CRBP,8,49866,-1 YI,3,12658,0 GSS,6,11740,3 OLBK,5,35365,-4 Average,5.5,27407,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $19 million in AUDC's case. Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP) is the most popular stock in this table. On the other hand 111, Inc. (NASDAQ:YI) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks AudioCodes Ltd. (NASDAQ:AUDC) is more popular among hedge funds. 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. Hedge funds were also right about betting on AUDC as the stock returned 23% during Q3 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.