The elite funds run by legendary investors such as Dan Loeb and David Tepper 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 incentive 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 Carbonite Inc (NASDAQ:CARB) from the perspective of those elite funds.
Carbonite Inc (NASDAQ:CARB) investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months. CARB was in 22 hedge funds’ portfolios at the end of September. There were 23 hedge funds in our database with CARB positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Everyday Health Inc (NYSE:EVDY), First Connecticut Bancorp Inc (NASDAQ:FBNK), and LeMaitre Vascular Inc (NASDAQ:LMAT) to gather more data points.
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Today there are several signals investors employ to appraise stocks. A couple of the most useful signals are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the elite investment managers can beat their index-focused peers by a significant margin (see the details here).
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How have hedgies been trading Carbonite Inc (NASDAQ:CARB)?
At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a 4% dip from the previous quarter, which followed a 44% Q2 surge in ownership. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Crosslink Capital, managed by Seymour Sy Kaufman and Michael Stark, holds the most valuable position in Carbonite Inc (NASDAQ:CARB). Crosslink Capital has a $28.8 million position in the stock, comprising 5.2% of its 13F portfolio. The second most bullish fund manager is Jim Simons of Renaissance Technologies, with a $25.8 million position. Some other professional money managers with similar optimism consist of Brett Hendrickson’s Nokomis Capital, Josh Goldberg’s G2 Investment Partners Management and Brian C. Freckmann’s Lyon Street Capital.
Seeing as Carbonite Inc (NASDAQ:CARB) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of hedgies who sold off their full holdings last quarter. It’s worth mentioning that Ken Grossman and Glen Schneider’s SG Capital Management dumped the largest investment of the “upper crust” of funds followed by Insider Monkey, worth close to $1.1 million in stock, and Charles Paquelet’s Skylands Capital was right behind this move, as the fund dropped about $0.2 million worth of shares.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Carbonite Inc (NASDAQ:CARB) but similarly valued. We will take a look at Everyday Health Inc (NYSE:EVDY), First Connecticut Bancorp Inc (NASDAQ:FBNK), LeMaitre Vascular Inc (NASDAQ:LMAT), and Phoenix New Media Ltd ADR (NYSE:FENG). This group of stocks’ market valuations are closest to CARB’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EVDY | 12 | 12278 | 4 |
| FBNK | 7 | 24519 | -5 |
| LMAT | 11 | 28935 | 4 |
| FENG | 10 | 25476 | 2 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $144 million in CARB’s case. Everyday Health Inc (NYSE:EVDY) is the most popular stock in this table. On the other hand First Connecticut Bancorp Inc (NASDAQ:FBNK) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Carbonite Inc (NASDAQ:CARB) is more popular among hedge funds. Considering that hedge funds are very fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
