In this article we are going to use hedge fund sentiment as a tool and determine whether Mimecast Limited (NASDAQ:MIME) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Mimecast Limited (NASDAQ:MIME) a healthy stock for your portfolio? The smart money was taking a bullish view. The number of bullish hedge fund bets moved up by 4 lately. Mimecast Limited (NASDAQ:MIME) was in 28 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 39. Our calculations also showed that MIME isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 24 hedge funds in our database with MIME holdings at the end of June.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to take a gander at the latest hedge fund action regarding Mimecast Limited (NASDAQ:MIME).
Robert Moses of RGM Capital
Do Hedge Funds Think MIME Is A Good Stock To Buy Now?
At the end of September, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MIME over the last 25 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
More specifically, RGM Capital was the largest shareholder of Mimecast Limited (NASDAQ:MIME), with a stake worth $85.8 million reported as of the end of September. Trailing RGM Capital was Lakewood Capital Management, which amassed a stake valued at $55.3 million. Two Sigma Advisors, Bares Capital Management, and Renaissance Technologies 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 RGM Capital allocated the biggest weight to Mimecast Limited (NASDAQ:MIME), around 4.21% of its 13F portfolio. MAK Capital One is also relatively very bullish on the stock, setting aside 3.12 percent of its 13F equity portfolio to MIME.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Renaissance Technologies, created the most outsized position in Mimecast Limited (NASDAQ:MIME). Renaissance Technologies had $27.4 million invested in the company at the end of the quarter. Michael Kaufman’s MAK Capital One also made a $15.8 million investment in the stock during the quarter. The other funds with brand new MIME positions are George McCabe’s Portolan Capital Management, Anand Parekh’s Alyeska Investment Group, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s also examine hedge fund activity in other stocks similar to Mimecast Limited (NASDAQ:MIME). We will take a look at Open Lending Corporation (NASDAQ:LPRO), AppFolio Inc (NASDAQ:APPF), Amyris Inc (NASDAQ:AMRS), Cushman & Wakefield plc (NYSE:CWK), Qurate Retail, Inc. (NASDAQ:QRTEA), The Hain Celestial Group, Inc. (NASDAQ:HAIN), and The Ensign Group, Inc. (NASDAQ:ENSG). This group of stocks’ market values match MIME’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LPRO | 28 | 382084 | 4 |
| APPF | 15 | 371709 | -2 |
| AMRS | 17 | 403439 | -4 |
| CWK | 24 | 187323 | 1 |
| QRTEA | 34 | 676717 | -5 |
| HAIN | 24 | 982409 | -2 |
| ENSG | 18 | 70587 | 1 |
| Average | 22.9 | 439181 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.9 hedge funds with bullish positions and the average amount invested in these stocks was $439 million. That figure was $369 million in MIME’s case. Qurate Retail, Inc. (NASDAQ:QRTEA) is the most popular stock in this table. On the other hand AppFolio Inc (NASDAQ:APPF) is the least popular one with only 15 bullish hedge fund positions. Mimecast Limited (NASDAQ:MIME) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MIME is 64.7. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Hedge funds were also right about betting on MIME as the stock returned 24.5% since the end of Q3 (through 12/9) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Mimecast Ltd (NASDAQ:MIME)
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Disclosure: None. This article was originally published at Insider Monkey.
