Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards Monotype Imaging Holdings Inc. (NASDAQ:TYPE).
Is Monotype Imaging Holdings Inc. (NASDAQ:TYPE) a buy, sell, or hold? Money managers are becoming hopeful. The number of long hedge fund bets rose by 2 lately. Our calculations also showed that TYPE isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s take a peek at the fresh hedge fund action encompassing Monotype Imaging Holdings Inc. (NASDAQ:TYPE).
What have hedge funds been doing with Monotype Imaging Holdings Inc. (NASDAQ:TYPE)?
Heading into the fourth quarter of 2018, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TYPE over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, RGM Capital held the most valuable stake in Monotype Imaging Holdings Inc. (NASDAQ:TYPE), which was worth $71.3 million at the end of the third quarter. On the second spot was Trigran Investments which amassed $53.6 million worth of shares. Moreover, Daruma Asset Management, Renaissance Technologies, and Citadel Investment Group were also bullish on Monotype Imaging Holdings Inc. (NASDAQ:TYPE), allocating a large percentage of their portfolios to this stock.
Consequently, key money managers were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the most valuable position in Monotype Imaging Holdings Inc. (NASDAQ:TYPE). Marshall Wace LLP had $5.4 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also made a $0.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Alec Litowitz and Ross Laser’s Magnetar Capital and Ernest Chow and Jonathan Howe’s Sensato Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Monotype Imaging Holdings Inc. (NASDAQ:TYPE) but similarly valued. We will take a look at Calamos Convertible Opportunities and Income Fund (NASDAQ:CHI), Heska Corp (NASDAQ:HSKA), Invesco Dynamic Credit Opportunities Fd (NYSE:VTA), and Canadian Solar Inc. (NASDAQ:CSIQ). This group of stocks’ market values resemble TYPE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHI | 1 | 124 | 0 |
| HSKA | 10 | 69102 | 1 |
| VTA | 4 | 1542 | -1 |
| CSIQ | 15 | 127523 | 8 |
| Average | 7.5 | 49573 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $204 million in TYPE’s case. Canadian Solar Inc. (NASDAQ:CSIQ) is the most popular stock in this table. On the other hand Calamos Convertible Opportunities and Income Fund (NASDAQ:CHI) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Monotype Imaging Holdings Inc. (NASDAQ:TYPE) 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. This article was originally published at Insider Monkey.
