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 in recent 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 certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Qumu Corp (NASDAQ:QUMU).
Is Qumu Corp (NASDAQ:QUMU) a buy, sell, or hold? The best stock pickers were turning bullish. The number of long hedge fund positions increased by 1 in recent months. Qumu Corp (NASDAQ:QUMU) was in 4 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 3. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that QUMU isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 3 hedge funds in our database with QUMU holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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. Now let’s view the new hedge fund action surrounding Qumu Corp (NASDAQ:QUMU).
Hedge fund activity in Qumu Corp (NASDAQ:QUMU)
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards QUMU over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Raymond J. Harbert’s Harbert Management has the most valuable position in Qumu Corp (NASDAQ:QUMU), worth close to $6.3 million, corresponding to 7.7% of its total 13F portfolio. On Harbert Management’s heels of Renaissance Technologies, with a $4.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism comprise Israel Englander’s Millennium Management, Greg Eisner’s Engineers Gate Manager and . In terms of the portfolio weights assigned to each position Harbert Management allocated the biggest weight to Qumu Corp (NASDAQ:QUMU), around 7.7% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.0042 percent of its 13F equity portfolio to QUMU.
Now, specific money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, established the most outsized position in Qumu Corp (NASDAQ:QUMU). Millennium Management had $0.2 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also made a $0.1 million investment in the stock during the quarter.
Let’s also examine hedge fund activity in other stocks similar to Qumu Corp (NASDAQ:QUMU). These stocks are Zomedica Corp. (NYSE:ZOM), Medallion Financial Corp. (NASDAQ:MFIN), Scully Royalty Ltd. (NYSE:SRL), Oramed Pharmaceuticals Inc. (NASDAQ:ORMP), Garrison Capital Inc (NASDAQ:GARS), Guaranty Federal Bancshares, Inc. (NASDAQ:GFED), and Forum Energy Technologies Inc (NYSE:FET). This group of stocks’ market valuations are similar to QUMU’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ZOM | 4 | 572 | 2 |
| MFIN | 6 | 4169 | -2 |
| SRL | 2 | 4086 | 0 |
| ORMP | 7 | 1819 | 3 |
| GARS | 5 | 5684 | 0 |
| GFED | 2 | 1126 | 0 |
| FET | 6 | 1686 | -8 |
| Average | 4.6 | 2735 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.6 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $11 million in QUMU’s case. Oramed Pharmaceuticals Inc. (NASDAQ:ORMP) is the most popular stock in this table. On the other hand Scully Royalty Ltd. (NYSE:SRL) is the least popular one with only 2 bullish hedge fund positions. Qumu Corp (NASDAQ:QUMU) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for QUMU is 56. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and surpassed the market again by 16.1 percentage points. Unfortunately QUMU wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); QUMU investors were disappointed as the stock returned 8.5% since the end of September (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow Qumu Corp (NASDAQ:QUMU)
Follow Qumu Corp (NASDAQ:QUMU)
Suggested Articles:
- 10 Best Growth Stocks To Buy According to Ray Dalio
- 10 Best Bank Stocks To Buy Now
- 10 Best Lithium and Battery Stocks To Buy Now
Disclosure: None. This article was originally published at Insider Monkey.
