At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Is Blucora Inc (NASDAQ:BCOR) worth your attention right now? The smart money is definitely selling. The number of long hedge fund positions that are disclosed in regulatory 13F filings were cut by 2 in recent months. BCORwas in 20 hedge funds’ portfolios at the end of the third quarter of 2016. There were 22 hedge funds in our database with BCOR holdings 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 Career Education Corp. (NASDAQ:CECO), Lands’ End, Inc. (NASDAQ:LE), and Kinsale Capital Group Inc (NASDAQ:KNSL) to gather more data points.
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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 gander at the key action encompassing Blucora Inc (NASDAQ:BCOR).
What have hedge funds been doing with Blucora Inc (NASDAQ:BCOR)?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BCOR over the last 5 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies, led by Jim Simons, holds the largest position in Blucora Inc (NASDAQ:BCOR). Renaissance Technologies has a $14.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Pennant Capital Management, led by Alan Fournier, which holds a $13.2 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish encompass Peter S. Park’s Park West Asset Management, Mario Gabelli’s GAMCO Investors and Chuck Royce’s Royce & Associates. We should note that none of these hedge funds are 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.
Because Blucora Inc (NASDAQ:BCOR) has gone through a decline in interest from the smart money, it’s easy to see that there is a sect of money managers who sold off their full holdings last quarter. Interestingly, Steven Boyd’s Armistice Capital cut the biggest investment of the “upper crust” of funds tracked by Insider Monkey, valued at close to $5.2 million in stock, and Howard Marks’s Oaktree Capital Management was right behind this move, as the fund dropped about $3.4 million worth of shares.
Let’s now take a look at hedge fund activity in other stocks similar to Blucora Inc (NASDAQ:BCOR). These stocks are Career Education Corp. (NASDAQ:CECO), Lands’ End, Inc. (NASDAQ:LE), Kinsale Capital Group Inc (NASDAQ:KNSL), and Net 1 UEPS Technologies Inc (NASDAQ:UEPS). This group of stocks’ market values resemble BCOR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CECO | 16 | 62286 | 7 |
| LE | 9 | 152042 | -1 |
| KNSL | 6 | 10395 | 6 |
| UEPS | 19 | 196031 | 1 |
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $73 million in BCOR’s case. Net 1 UEPS Technologies Inc (NASDAQ:UEPS) is the most popular stock in this table. On the other hand Kinsale Capital Group Inc (NASDAQ:KNSL) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Blucora Inc (NASDAQ:BCOR) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
