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 COMSCORE, Inc. (NASDAQ:SCOR) from the perspective of those elite funds.
COMSCORE, Inc. (NASDAQ:SCOR) shareholders have witnessed a decrease in hedge fund interest recently. SCOR was in 12 hedge funds' portfolios at the end of December. There were 13 hedge funds in our database with SCOR positions at the end of the previous quarter. Our calculations also showed that scor isn't among the 30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_735675" align="aligncenter" width="473"] Didric Cederholm of Lion Point Capital[/caption]
We're going to review the new hedge fund action surrounding COMSCORE, Inc. (NASDAQ:SCOR).
How have hedgies been trading COMSCORE, Inc. (NASDAQ:SCOR)?
At Q4's end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in SCOR over the last 14 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, RGM Capital held the most valuable stake in COMSCORE, Inc. (NASDAQ:SCOR), which was worth $63 million at the end of the fourth quarter. On the second spot was Bares Capital Management which amassed $50.9 million worth of shares. Moreover, Lion Point, Royce & Associates, and GAMCO Investors were also bullish on COMSCORE, Inc. (NASDAQ:SCOR), allocating a large percentage of their portfolios to this stock.
Because COMSCORE, Inc. (NASDAQ:SCOR) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers that elected to cut their full holdings heading into Q3. At the top of the heap, Jim Simons's Renaissance Technologies cut the biggest investment of all the hedgies followed by Insider Monkey, worth close to $1.3 million in stock. Israel Englander's fund, Millennium Management, also cut its stock, about $0.9 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 1 funds heading into Q3.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as COMSCORE, Inc. (NASDAQ:SCOR) but similarly valued. These stocks are Gran Tierra Energy Inc. (NYSE:GTE), Athenex, Inc. (NASDAQ:ATNX), Interface, Inc. (NASDAQ:TILE), and TPI Composites, Inc. (NASDAQ:TPIC). All of these stocks' market caps resemble SCOR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GTE,16,249835,0 ATNX,10,67768,3 TILE,16,59233,-1 TPIC,13,89898,-4 Average,13.75,116684,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $117 million. That figure was $190 million in SCOR's case. Gran Tierra Energy Inc. (NYSE:GTE) is the most popular stock in this table. On the other hand Athenex, Inc. (NASDAQ:ATNX) is the least popular one with only 10 bullish hedge fund positions. COMSCORE, Inc. (NASDAQ:SCOR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately SCOR wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); SCOR investors were disappointed as the stock returned -12.7% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.