Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Avid Technology, Inc. (NASDAQ:AVID) in this article.
Avid Technology, Inc. (NASDAQ:AVID) was in 15 hedge funds’ portfolios at the end of the first quarter of 2019. AVID shareholders have witnessed an increase in support from the world’s most elite money managers lately. There were 12 hedge funds in our database with AVID holdings at the end of the previous quarter. Our calculations also showed that AVID isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s check out the new hedge fund action encompassing Avid Technology, Inc. (NASDAQ:AVID).
What does smart money think about Avid Technology, Inc. (NASDAQ:AVID)?
At Q1’s end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the fourth quarter of 2018. On the other hand, there were a total of 14 hedge funds with a bullish position in AVID a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Cove Street Capital was the largest shareholder of Avid Technology, Inc. (NASDAQ:AVID), with a stake worth $41.8 million reported as of the end of March. Trailing Cove Street Capital was Royce & Associates, which amassed a stake valued at $11.1 million. Private Capital Management, Arrowstreet Capital, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Avid Technology, Inc. (NASDAQ:AVID) headfirst. GLG Partners, managed by Noam Gottesman, initiated the biggest call position in Avid Technology, Inc. (NASDAQ:AVID). GLG Partners had $1.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.3 million position during the quarter. The following funds were also among the new AVID investors: Matthew Hulsizer’s PEAK6 Capital Management, Michael Gelband’s ExodusPoint Capital, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Avid Technology, Inc. (NASDAQ:AVID) but similarly valued. These stocks are Cellular Biomedicine Group, Inc. (NASDAQ:CBMG), Radiant Logistics, Inc. (NYSE:RLGT), Spartan Motors Inc (NASDAQ:SPAR), and Spark Energy, Inc. (NASDAQ:SPKE). This group of stocks’ market valuations are closest to AVID’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CBMG | 2 | 12174 | 2 |
| RLGT | 12 | 10573 | 2 |
| SPAR | 15 | 34374 | 1 |
| SPKE | 11 | 15596 | -1 |
| Average | 10 | 18179 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $69 million in AVID’s case. Spartan Motors Inc (NASDAQ:SPAR) is the most popular stock in this table. On the other hand Cellular Biomedicine Group, Inc. (NASDAQ:CBMG) is the least popular one with only 2 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on AVID as the stock returned 11.4% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
