Hedge Funds Are Betting On Digimarc Corp (DMRC)

It’s a little-known fact that stock performance is not evenly distributed (i.e. you don’t have a 50/50 chance of picking a market-beating stock). In fact, despite the S&P 500 gaining about 5.2% between November 1, 2014 and October 30, 2015, less than 49% of the stocks in the index beat the market during that time. In contrast, the 30 stocks from the index which were the most popular among the investors that we track returned 9.5% during that time and 63% of them beat the market. This shows that while hedge funds get a lot of flak from the mainstream media for their performance, it can be rewarding to follow their moves using the right sets of data. Even then, there is never a fool proof strategy to generating returns, as even the collective wisdom of top hedge funds gets it wrong some times, as in the case of some of their top picks from the index like Micron and Anadarko. The data, though, shows that following the collective wisdom of select hedge funds can be a very wise move overall.

Is Digimarc Corp (NASDAQ:DMRC) ready to rally soon? Hedge funds are becoming more confident. The number of long hedge fund bets inched up by 2 in recent months. DMRC was in 7 hedge funds’ portfolios at the end of September. There were 5 hedge funds in our database with DMRC 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 CNX Coal Resources LP (NYSE:CNXC), Syneron Medical Ltd. (NASDAQ:ELOS), and Compugen Ltd. (USA) (NASDAQ:CGEN) to gather more data points.

If you’d ask most shareholders, hedge funds are viewed as underperforming, outdated investment tools of the past. While there are more than 8000 funds trading today, Our experts choose to focus on the upper echelon of this group, around 700 funds. These hedge fund managers oversee most of the smart money’s total capital, and by keeping an eye on their first-class investments, Insider Monkey has formulated a few investment strategies that have historically exceeded the broader indices. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Keeping this in mind, we’re going to check out the recent action encompassing Digimarc Corp (NASDAQ:DMRC).

How are hedge funds trading Digimarc Corp (NASDAQ:DMRC)?

At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 40% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Rima Senvest Management, managed by Richard Mashaal, holds the biggest position in Digimarc Corp (NASDAQ:DMRC). Rima Senvest Management has a $18.8 million position in the stock, comprising 1.4% of its 13F portfolio. Sitting at the No. 2 spot is Driehaus Capital, led by Richard Driehaus, holding a $1.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism include Josh Goldberg’s G2 Investment Partners Management, Amy Minella’s Cardinal Capital and Adam Wright and Gary Kohler’s Blue Clay Capital.