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Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks aren't doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Marchex, Inc. (NASDAQ:MCHX) changed recently.
Is MCHX a good stock to buy now? Marchex, Inc. (NASDAQ:MCHX) was in 10 hedge funds' portfolios at the end of September. The all time high for this statistics is 18. MCHX has seen a decrease in enthusiasm from smart money in recent months. There were 12 hedge funds in our database with MCHX holdings at the end of June. Our calculations also showed that MCHX isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
According to most shareholders, hedge funds are assumed to be worthless, outdated financial vehicles of the past. While there are more than 8000 funds in operation at present, Our researchers look at the masters of this club, approximately 850 funds. It is estimated that this group of investors orchestrate bulk of the hedge fund industry's total capital, and by shadowing their inimitable investments, Insider Monkey has identified various investment strategies that have historically beaten the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
David Siegel of Two Sigma Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let's take a look at the new hedge fund action regarding Marchex, Inc. (NASDAQ:MCHX).
Do Hedge Funds Think MCHX Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in MCHX over the last 21 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
The largest stake in Marchex, Inc. (NASDAQ:MCHX) was held by Roumell Asset Management, which reported holding $7.7 million worth of stock at the end of September. It was followed by Harbert Management with a $5.6 million position. Other investors bullish on the company included Renaissance Technologies, P.A.W. CAPITAL PARTNERS, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Roumell Asset Management allocated the biggest weight to Marchex, Inc. (NASDAQ:MCHX), around 15.3% of its 13F portfolio. Harbert Management is also relatively very bullish on the stock, setting aside 6.84 percent of its 13F equity portfolio to MCHX.
Since Marchex, Inc. (NASDAQ:MCHX) has faced declining sentiment from the entirety of the hedge funds we track, logic holds that there were a few fund managers that decided to sell off their full holdings last quarter. At the top of the heap, Donald Sussman's Paloma Partners dumped the largest position of the 750 funds tracked by Insider Monkey, valued at an estimated $0.1 million in stock. D. E. Shaw's fund, D E Shaw, also dumped its stock, about $0 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 2 funds last quarter.
Let's go over hedge fund activity in other stocks similar to Marchex, Inc. (NASDAQ:MCHX). These stocks are Greenlane Holdings, Inc. (NASDAQ:GNLN), On Deck Capital Inc (NYSE:ONDK), Oak Valley Bancorp (NASDAQ:OVLY), Westwood Holdings Group, Inc. (NYSE:WHG), Bionano Genomics, Inc. (NASDAQ:BNGO), Pareteum Corporation (NASDAQ:TEUM), and Ultralife Corp. (NASDAQ:ULBI). This group of stocks' market caps are similar to MCHX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GNLN,4,2272,0 ONDK,13,24345,-3 OVLY,1,161,0 WHG,7,16823,-1 BNGO,2,202,-1 TEUM,4,465,-3 ULBI,4,2236,1 Average,5,6643,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $21 million in MCHX's case. On Deck Capital Inc (NYSE:ONDK) is the most popular stock in this table. On the other hand Oak Valley Bancorp (CA) (NASDAQ:OVLY) is the least popular one with only 1 bullish hedge fund positions. Marchex, Inc. (NASDAQ:MCHX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MCHX is 57.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on MCHX as the stock returned 15.6% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.