Here is What Hedge Funds Think About Avid Technology, Inc. (AVID)

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

Avid Technology, Inc. (NASDAQ:AVID) has experienced an increase in support from the world’s most successful money managers recently. There were 10 hedge funds in our database with AVID holdings at the end of the previous quarter. At the end of this article we will also compare AVID to other stocks including DSP Group, Inc. (NASDAQ:DSPG), Mitek Systems, Inc. (NASDAQ:MITK), and Tandem Diabetes Care Inc (NASDAQ:TNDM) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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With all of this in mind, we’re going to take a glance at the new action regarding Avid Technology, Inc. (NASDAQ:AVID).

What does the smart money think about Avid Technology, Inc. (NASDAQ:AVID)?

At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a jump of 70% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in AVID heading into this year. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Richard Blum’s Blum Capital Partners has the most valuable position in Avid Technology, Inc. (NASDAQ:AVID), worth close to $52.1 million, comprising 100% of its total 13F portfolio. On Blum Capital Partners’s heels is Cove Street Capital, led by Jeffrey Bronchick, holding a $20.8 million position; the fund has 2.2% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish comprise Gregg J. Powers’s Private Capital Management, Chuck Royce’s Royce & Associates and Arnaud Ajdler’s Engine Capital. We should note that Engine Capital is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Cove Street Capital, led by Jeffrey Bronchick, established the most valuable position in Avid Technology, Inc. (NASDAQ:AVID). Peter Algert and Kevin Coldiron’s Algert Coldiron Investors also initiated a $1.8 million position during the quarter. The other funds with brand new AVID positions are John Overdeck and David Siegel’s Two Sigma Advisors, Adam Usdan’s Trellus Management Company, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Avid Technology, Inc. (NASDAQ:AVID) but similarly valued. We will take a look at DSP Group, Inc. (NASDAQ:DSPG), Mitek Systems, Inc. (NASDAQ:MITK), Tandem Diabetes Care Inc (NASDAQ:TNDM), and Boot Barn Holdings Inc (NYSE:BOOT). This group of stocks’ market values are closest to AVID’s market value.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $94 million in AVID’s case. Mitek Systems, Inc. (NASDAQ:MITK) is the most popular stock in this table. On the other hand Boot Barn Holdings Inc (NYSE:BOOT) is the least popular one with only 9 bullish hedge fund positions. Avid Technology, Inc. (NASDAQ:AVID) 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 MITK might be a better candidate to consider taking a long position in.

Disclosure: none.