You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Marin Software Inc (NYSE:MRIN) shareholders have witnessed a decrease in hedge fund sentiment lately. MRIN was in 7 hedge funds’ portfolios at the end of September. There were 8 hedge funds in our database with MRIN holdings at the end of the previous quarter. At the end of this article we will also compare MRIN to other stocks including LMI Aerospace, Inc. (NASDAQ:LMIA), Hutchison China MediTech Ltd – ADR (NASDAQ:HCM), and GSI Technology, Inc. (NASDAQ:GSIT) to get a better sense of its popularity.
Follow Marin Software Inc (NYSE:MRIN)
Follow Marin Software Inc (NYSE:MRIN)
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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Keeping this in mind, we’re going to analyze the fresh action regarding Marin Software Inc (NYSE:MRIN).
What have hedge funds been doing with Marin Software Inc (NYSE:MRIN)?
Heading into the fourth quarter of 2016, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 13% from one quarter earlier. By comparison, 8 hedge funds held shares or bullish call options in MRIN heading into this year. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Raging Capital Management, led by William C. Martin, holds the number one position in Marin Software Inc (NYSE:MRIN). Raging Capital Management has a $8.1 million position in the stock, comprising 1.1% of its 13F portfolio. Coming in second is Renaissance Technologies, one of the largest hedge funds in the world, with a $2.1 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions comprise Chuck Royce’s Royce & Associates, Seymour Sy Kaufman and Michael Stark’s Crosslink Capital and D. E. Shaw’s D E Shaw. We should note that Raging Capital Management 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.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: LMR Partners. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 700+ hedge funds tracked by Insider Monkey identified MRIN as a viable investment and initiated a position in the stock.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Marin Software Inc (NYSE:MRIN) but similarly valued. We will take a look at LMI Aerospace, Inc. (NASDAQ:LMIA), Hutchison China MediTech Ltd – ADR (NASDAQ:HCM), GSI Technology, Inc. (NASDAQ:GSIT), and CorMedix Inc. (NYSEMKT:CRMD). This group of stocks’ market valuations resemble MRIN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LMIA | 6 | 35260 | 0 |
| HCM | 5 | 17770 | 0 |
| GSIT | 5 | 10690 | -2 |
| CRMD | 3 | 3997 | -1 |
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $15 million in MRIN’s case. LMI Aerospace, Inc. (NASDAQ:LMIA) is the most popular stock in this table. On the other hand CorMedix Inc. (NYSEAMEX:CRMD) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Marin Software Inc (NYSE:MRIN) 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.
Disclosure: None
