How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding ChannelAdvisor Corp (NYSE:ECOM).
ChannelAdvisor Corp (NYSE:ECOM) investors should pay attention to an increase in support from the world’s most elite money managers in recent months. ECOM was in 11 hedge funds’ portfolios at the end of September. There were 10 hedge funds in our database with ECOM holdings at the end of the previous quarter. Our calculations also showed that ECOM isn’t among the 30 most popular stocks among hedge funds.
According to most stock holders, hedge funds are assumed to be underperforming, old investment vehicles of yesteryear. While there are greater than 8,000 funds trading at the moment, Our experts look at the aristocrats of this club, approximately 700 funds. These money managers direct the lion’s share of the smart money’s total capital, and by shadowing their unrivaled investments, Insider Monkey has revealed many investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship hedge fund strategy outrun the S&P 500 index by 6 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
We’re going to view the fresh hedge fund action encompassing ChannelAdvisor Corp (NYSE:ECOM).
What does the smart money think about ChannelAdvisor Corp (NYSE:ECOM)?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ECOM over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Archon Capital Management held the most valuable stake in ChannelAdvisor Corp (NYSE:ECOM), which was worth $11.4 million at the end of the third quarter. On the second spot was G2 Investment Partners Management which amassed $8.7 million worth of shares. Moreover, D E Shaw, Renaissance Technologies, and Millennium Management were also bullish on ChannelAdvisor Corp (NYSE:ECOM), allocating a large percentage of their portfolios to this stock.
Consequently, key hedge funds have been driving this bullishness. Cannell Capital, managed by J. Carlo Cannell, created the most valuable position in ChannelAdvisor Corp (NYSE:ECOM). Cannell Capital had $0.4 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $0.1 million investment in the stock during the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as ChannelAdvisor Corp (NYSE:ECOM) but similarly valued. We will take a look at Regional Management Corp (NYSE:RM), Artesian Resources Corporation (NASDAQ:ARTNA), Seadrill Partners LLC (NYSE:SDLP), and Blackrock Municipal Income Qual (NYSE:BYM). This group of stocks’ market caps match ECOM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RM | 13 | 98987 | 2 |
| ARTNA | 4 | 14333 | 1 |
| SDLP | 6 | 28427 | 1 |
| BYM | 2 | 422 | 0 |
| Average | 6.25 | 35542 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $37 million in ECOM’s case. Regional Management Corp (NYSE:RM) is the most popular stock in this table. On the other hand Blackrock Municipal Income Qual (NYSE:BYM) is the least popular one with only 2 bullish hedge fund positions. ChannelAdvisor Corp (NYSE:ECOM) 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 RM might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
