Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third most popular stock, lost 10% amid uncertainty regarding the interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
MINDBODY Inc (NASDAQ:MB) has experienced a decrease in hedge fund sentiment in recent months. What may sound a bit surprising is the fact that the shares of MINDBODY Inc (NASDAQ:MB) were trading up 13.02% during the quarter, prompting us to find out more about the hedge funds holding positions in the company, at the end of the last quarter.
For a better understanding of the hedge fund sentiment, we will compare MINDBODY Inc (NASDAQ:MB) to other stocks, including Performance Sports Group Ltd (NYSE:PSG), Patrick Industries, Inc. (NASDAQ:PATK), and Pier 1 Imports, Inc. (NYSE:PIR) to get a better sense of its popularity.
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In the eyes of most investors, hedge funds are perceived as unimportant, old investment vehicles of the past. While there are more than an 8000 funds trading at the moment, Our researchers choose to focus on the leaders of this group, about 700 funds. It is estimated that this group of investors has their hands on the majority of all hedge funds’ total capital, and by monitoring their finest equity investments, Insider Monkey has spotted many investment strategies that have historically outperformed the market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points annually for a decade in their back tests.
Keeping this in mind, we’re going to take a gander at the key action regarding MINDBODY Inc (NASDAQ:MB).
How have hedgies been trading MINDBODY Inc (NASDAQ:MB)?
Heading into Q4, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decrease of 44% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Jericho Capital Asset Management, managed by Josh Resnick, holds the largest position in MINDBODY Inc (NASDAQ:MB). Jericho Capital Asset Management has a $10.9 million position in the stock, comprising 0.7% of its 13F portfolio. On Jericho Capital Asset Management’s heels is Anand Parekh of Alyeska Investment Group, with a $4 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions encompass David Costen Haley’s HBK Investments, Warren Lammert’s Granite Point Capital, and Paul Tudor Jones’s Tudor Investment Corp.
Seeing as MINDBODY Inc (NASDAQ:MB) has experienced a falling interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of money managers who were dropping their entire stakes heading into Q4. Intriguingly, Nick Niell’s Arrowgrass Capital Partners cut the largest position of the 700 funds monitored by Insider Monkey, worth about $5.5 million in stock, and Brian Taylor’s Pine River Capital Management was right behind this move, as the fund sold off about $2.3 million worth of shares. These moves are interesting, as total hedge fund interest dropped by 7 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to MINDBODY Inc (NASDAQ:MB). We will take a look at Performance Sports Group Ltd (NYSE:PSG), Patrick Industries, Inc. (NASDAQ:PATK), Pier 1 Imports, Inc. (NYSE:PIR), and FARO Technologies, Inc. (NASDAQ:FARO). This group of stocks’ market valuations are closest to MINDBODY Inc (NASDAQ:MB)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PSG | 11 | 24505 | 0 |
| PATK | 18 | 105827 | -1 |
| PIR | 19 | 47350 | 0 |
| FARO | 7 | 25745 | 0 |
As you can see, these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $24 million in MINDBODY Inc (NASDAQ:MB)’s case. Pier 1 Imports, Inc. (NYSE:PIR) is the most popular stock in this table. On the other hand, FARO Technologies, Inc. (NASDAQ:FARO) is the least popular one with only 7 bullish hedge fund positions. MINDBODY Inc (NASDAQ:MB) 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, Pier 1 Imports, Inc. (NYSE:PIR) might be a better candidate to consider a long position.
