Is AVID Stock A Buy?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on Avid Technology, Inc. (NASDAQ:AVID).

Is AVID stock a buy? Investors who are in the know were getting more optimistic. The number of long hedge fund bets inched up by 7 in recent months. Avid Technology, Inc. (NASDAQ:AVID) was in 26 hedge funds’ portfolios at the end of December. The all time high for this statistic is 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that AVID isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Jeffrey Bronchick of Cove Street Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s analyze the fresh hedge fund action surrounding Avid Technology, Inc. (NASDAQ:AVID).

Do Hedge Funds Think AVID Is A Good Stock To Buy Now?

At fourth quarter’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 37% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AVID over the last 22 quarters. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

More specifically, Impactive Capital was the largest shareholder of Avid Technology, Inc. (NASDAQ:AVID), with a stake worth $109.2 million reported as of the end of December. Trailing Impactive Capital was Royce & Associates, which amassed a stake valued at $26.4 million. Rubric Capital Management, Voss Capital, and Cove Street Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Impactive Capital allocated the biggest weight to Avid Technology, Inc. (NASDAQ:AVID), around 19.16% of its 13F portfolio. Voss Capital is also relatively very bullish on the stock, earmarking 7.21 percent of its 13F equity portfolio to AVID.

With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Rubric Capital Management, managed by David Rosen, created the most valuable position in Avid Technology, Inc. (NASDAQ:AVID). Rubric Capital Management had $15.9 million invested in the company at the end of the quarter. Steven Ng and Andrew Mitchell’s Ophir Asset Management also initiated a $11.2 million position during the quarter. The other funds with new positions in the stock are George McCabe’s Portolan Capital Management, Ravee Mehta’s Nishkama Capital, and Zachary Miller’s Parian Global Management.

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 SM Energy Company (NYSE:SM), RPT Realty (NYSE:RPT), Avid Bioservices, Inc. (NASDAQ:CDMO), ARMOUR Residential REIT, Inc. (NYSE:ARR), Aspira Women’s Health Inc. (NASDAQ:AWH), Argan, Inc. (NYSE:AGX), and Allegiance Bancshares, Inc. (NASDAQ:ABTX). This group of stocks’ market valuations match AVID’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.1 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $253 million in AVID’s case. Avid Bioservices, Inc. (NASDAQ:CDMO) is the most popular stock in this table. On the other hand Allegiance Bancshares, Inc. (NASDAQ:ABTX) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Avid Technology, Inc. (NASDAQ:AVID) is more popular among hedge funds. Our overall hedge fund sentiment score for AVID is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 12.3% in 2021 through April 19th but still managed to beat the market by 0.9 percentage points. Hedge funds were also right about betting on AVID as the stock returned 30.3% since the end of December (through 4/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

Disclosure: None. This article was originally published at Insider Monkey.