World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients' money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It's not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It's also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Limelight Networks, Inc. (NASDAQ:LLNW) was in 12 hedge funds' portfolios at the end of the first quarter of 2019. LLNW shareholders have witnessed a decrease in hedge fund sentiment lately. There were 15 hedge funds in our database with LLNW positions at the end of the previous quarter. Our calculations also showed that llnw isn't among the 30 most popular stocks among hedge funds.
In the 21st century investor’s toolkit there are dozens of methods stock traders employ to appraise their holdings. Two of the most under-the-radar methods are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the elite investment managers can outperform their index-focused peers by a healthy amount (see the details here).
We're going to take a glance at the recent hedge fund action encompassing Limelight Networks, Inc. (NASDAQ:LLNW).
What does smart money think about Limelight Networks, Inc. (NASDAQ:LLNW)?
At Q1's end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from one quarter earlier. On the other hand, there were a total of 18 hedge funds with a bullish position in LLNW a year ago. 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).
The largest stake in Limelight Networks, Inc. (NASDAQ:LLNW) was held by Cannell Capital, which reported holding $9 million worth of stock at the end of March. It was followed by Renaissance Technologies with a $7.7 million position. Other investors bullish on the company included AQR Capital Management, Arrowstreet Capital, and Marshall Wace LLP.
Seeing as Limelight Networks, Inc. (NASDAQ:LLNW) has faced falling interest from hedge fund managers, it's easy to see that there was a specific group of fund managers who sold off their positions entirely heading into Q3. It's worth mentioning that Andrew Feldstein and Stephen Siderow's Blue Mountain Capital cut the largest position of the "upper crust" of funds tracked by Insider Monkey, totaling close to $0.2 million in stock, and Matthew Hulsizer's PEAK6 Capital Management was right behind this move, as the fund said goodbye to about $0.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 3 funds heading into Q3.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Limelight Networks, Inc. (NASDAQ:LLNW) but similarly valued. We will take a look at Simulations Plus, Inc. (NASDAQ:SLP), Carrols Restaurant Group, Inc. (NASDAQ:TAST), Digimarc Corp (NASDAQ:DMRC), and Hingham Institution for Savings (NASDAQ:HIFS). This group of stocks' market caps are closest to LLNW's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SLP,6,20658,1 TAST,19,109115,2 DMRC,3,33204,-1 HIFS,1,4077,0 Average,7.25,41764,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $40 million in LLNW's case. Carrols Restaurant Group, Inc. (NASDAQ:TAST) is the most popular stock in this table. On the other hand Hingham Institution for Savings (NASDAQ:HIFS) is the least popular one with only 1 bullish hedge fund positions. Limelight Networks, Inc. (NASDAQ:LLNW) 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 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately LLNW wasn't nearly as popular as these 20 stocks and hedge funds that were betting on LLNW were disappointed as the stock returned -11.5% during the same 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.