Do Hedge Funds Love Bazaarvoice Inc (BV)?

A market correction in the third quarter, spurred by a number of global macroeconomic concerns ended up having a negative impact on the markets and many hedge funds as a result. The stocks of smaller companies were especially hard hit during this time as investors fled to investments seen as being safer. This is evident in the fact that the Russell 2000 ETF underperformed the S&P 500 ETF by 14 percentage points between June 25 and the end of October. We also received indications that hedge funds were trimming their positions amid the market volatility and uncertainty, and given their greater inclination towards smaller cap stocks than other investors, it follows that a stronger sell-off occurred in those stocks. Let’s study the hedge fund sentiment to see how those concerns affected their ownership of Bazaarvoice Inc (NASDAQ:BV) during the quarter.

Bazaarvoice Inc (NASDAQ:BV) operates a shopper network that provides reviews, ratings, and other data from consumers. On the back of a sharp decline in March, the stock is down by 46% year-to-date. Among the funds we track, Bazaarvoice is not a very popular stock and the sentiment remained flat in the third quarter. This is usually a negative indicator. 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 Chase Corporation (NYSEMKT:CCF), BlackRock Debt Strategies Fund, Inc. (NYSE:DSU), and TRC Companies, Inc. (NYSE:TRR) to gather more data points.

According to most stock holders, hedge funds are seen as underperforming, old investment vehicles of yesteryear. While there are over 8000 funds with their doors open at present, Our experts choose to focus on the bigwigs of this group, about 700 funds. These hedge fund managers preside over the majority of the smart money’s total asset base, and by monitoring their highest performing equity investments, Insider Monkey has figured out numerous investment strategies that have historically surpassed Mr. Market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Keeping this in mind, let’s go over the key action surrounding Bazaarvoice Inc (NASDAQ:BV).

How are hedge funds trading Bazaarvoice Inc (NASDAQ:BV)?

At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock. Among these investors, Robert G. Moses’s RGM Capital has the most valuable position in Bazaarvoice Inc (NASDAQ:BV), worth close to $32.4 million, accounting for 4.3% of its total 13F portfolio. Sitting at the No. 2 spot is Discovery Group, led by Michael Murphy and Daniel Donoghue, holding an $23.4 million position; the fund has 8% of its 13F portfolio invested in the stock. The remaining members of the smart money that hold long positions comprise Anand Parekh’s Alyeska Investment Group, Ahmet Okumus’ Okumus Fund Management, and Scott Fine and Peter Richards’ Empire Capital Management.
In addition, there lies a certain “tier” of hedge funds that slashed their full holdings by the end of the third quarter. Interestingly, Ken Griffin’s Citadel Investment Group sold off the biggest stake of the “upper crust” of funds tracked by Insider Monkey, worth about $0.2 million in stock, and Jacob Gottlieb’s Visium Asset Management was right behind this move, as the fund cut about $0.1 million worth of shares. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Bazaarvoice Inc (NASDAQ:BV). These stocks are Chase Corporation (NYSEMKT:CCF), BlackRock Debt Strategies Fund, Inc. (NYSE:DSU), TRC Companies, Inc. (NYSE:TRR), and MarineMax, Inc. (NYSE:HZO). All of these stocks’ market caps are similar to BV’s market cap.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $89 million in BV’s case. MarineMax, Inc. (NYSE:HZO) is the most popular stock in this table. On the other hand BlackRock Debt Strategies Fund, Inc. (NYSE:DSU) is the least popular one with only 5 bullish hedge fund positions. Bazaarvoice Inc (NASDAQ:BV) 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. In this regard HZO might be a better candidate to consider a long position.