Blucora Inc (BCOR): Are Hedge Funds Right About This Stock?

Blucora Inc (NASDAQ:BCOR) was in 17 hedge funds’ portfolio at the end of March. BCOR shareholders have witnessed a decrease in enthusiasm from smart money recently. There were 20 hedge funds in our database with BCOR holdings at the end of the previous quarter.

According to most traders, hedge funds are viewed as worthless, old financial vehicles of years past. While there are over 8000 funds trading at present, we hone in on the upper echelon of this group, around 450 funds. It is estimated that this group controls the lion’s share of the smart money’s total capital, and by tracking their best investments, we have determined a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as beneficial, optimistic insider trading sentiment is a second way to parse down the financial markets. As the old adage goes: there are plenty of incentives for a bullish insider to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Various empirical studies have demonstrated the valuable potential of this strategy if shareholders understand what to do (learn more here).

With all of this in mind, it’s important to take a look at the recent action regarding Blucora Inc (NASDAQ:BCOR).

What does the smart money think about Blucora Inc (NASDAQ:BCOR)?

At the end of the first quarter, a total of 17 of the hedge funds we track were bullish in this stock, a change of -15% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes significantly.

Of the funds we track, Steven Cohen’s SAC Capital Advisors had the biggest position in Blucora Inc (NASDAQ:BCOR), worth close to $27.1 million, comprising 0.1% of its total 13F portfolio. The second largest stake is held by Jim Simons of Renaissance Technologies, with a $26 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Howard Guberman’s Gruss Asset Management, Richard Rubin’s Hawkeye Capital and Youlia Miteva’s Proxima Capital Management.

Due to the fact that Blucora Inc (NASDAQ:BCOR) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few hedge funds that slashed their entire stakes at the end of the first quarter. It’s worth mentioning that Robert B. Gillam’s McKinley Capital Management cut the largest investment of the 450+ funds we track, worth close to $3.1 million in stock.. Peter Algert and Kevin Coldiron’s fund, Algert Coldiron Investors, also dumped its stock, about $0.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 3 funds at the end of the first quarter.

What have insiders been doing with Blucora Inc (NASDAQ:BCOR)?

Insider buying is at its handiest when the company we’re looking at has seen transactions within the past half-year. Over the latest half-year time frame, Blucora Inc (NASDAQ:BCOR) has seen zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Blucora Inc (NASDAQ:BCOR). These stocks are Bitauto Hldg Ltd (ADR) (NYSE:BITA), Move Inc. (NASDAQ:MOVE), Web.com Group Inc (NASDAQ:WWWW), SouFun Holdings Limited (ADR) (NYSE:SFUN), and HealthStream, Inc. (NASDAQ:HSTM). This group of stocks belong to the internet information providers industry and their market caps resemble BCOR’s market cap.