Apigee Corp (APIC): Are Hedge Funds Right About This Stock?

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Apigee Corp (NASDAQ:APIC)? The smart money sentiment can provide an answer to this question.

Apigee Corp (NASDAQ:APIC) shareholders have witnessed a decrease in hedge fund interest recently. The shares of Apigee Corp were up 19.88% in the third quarter, which indicates a possibility of profit booking from hedge funds. For further understanding of the hedge fund sentiment, we decided to cover the hedge funds holding positions in the stock, moving forth to the next quarter.

Hedge funds have strong reasons behind their moves, so we’ll try to uncover their behavior in similar stocks. At the end of this article, we will compare Apigee Corp (NASDAQ:APIC) to other stocks, including Barrett Business Services, Inc. (NASDAQ:BBSI), STAAR Surgical Company (NASDAQ:STAA), and KongZhong Corporation(ADR) (NASDAQ:KZ) to get a better sense of its popularity.

According to most traders, hedge funds are perceived as slow, old investment tools of yesteryear. While there are more than 8000 funds with their doors open today, We hone in on the top tier of this club, approximately 700 funds. These hedge fund managers administer most of the smart money’s total asset base, and by watching their best stock picks, Insider Monkey has found a few investment strategies that have historically exceeded Mr. Market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

With all of this in mind, we’re going to view the new action encompassing Apigee Corp (NASDAQ:APIC).

How are hedge funds trading Apigee Corp (NASDAQ:APIC)?

At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 11% from the previous quarter. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Third Point, managed by Dan Loeb, holds the number one position in Apigee Corp (NASDAQ:APIC). Third Point has a $33.4 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is Brian Taylor of Pine River Capital Management, with a $4.5 million position; 0.1% of its 13F portfolio is allocated to the company. Some other peers that hold long positions comprise Brian Ashford-Russell and Tim Woolley’s Polar Capital, Bill Miller’s Legg Mason Capital Management, and Ken Griffin’s Citadel Investment Group.

Seeing as Apigee Corp (NASDAQ:APIC) has faced a bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there were a few fund managers who were dropping their full holdings heading into Q4. Intriguingly, Benjamin A. Smith’s Laurion Capital Management sold off the largest investment of the “upper crust” of funds monitored by Insider Monkey, worth close to $0.6 million in stock, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital was right behind this move, as the fund sold its entire stake of 3,000 shares. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 1 fund heading into Q4.

Let’s go over hedge fund activity in other stocks similar to Apigee Corp (NASDAQ:APIC). These stocks are Barrett Business Services, Inc. (NASDAQ:BBSI), STAAR Surgical Company (NASDAQ:STAA), KongZhong Corporation(ADR) (NASDAQ:KZ), and Era Group Inc (NYSE:ERA). All of these stocks’ market caps resemble Apigee Corp (NASDAQ:APIC)’s market cap.

As you can see, these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $42 million in Apigee Corp (NASDAQ:APIC)’s case. Barrett Business Services, Inc. (NASDAQ:BBSI) is the most popular stock in this table. On the other hand, KongZhong Corporation(ADR) (NASDAQ:KZ) is the least popular one with only 4 bullish hedge fund positions. Apigee Corp (NASDAQ:APIC) 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. In this regard, Barrett Business Services, Inc. (NASDAQ:BBSI) might be a better candidate to consider a long position.