It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Zix Corporation (NASDAQ:ZIXI).
Is Zix Corporation (NASDAQ:ZIXI) an attractive investment today? Investors who are in the know are definitely in a bullish mood. The number of bullish hedge fund bets that are revealed through the 13F filings rose by 1 lately. There were 14 hedge funds in our database with ZIXI positions at the end of the last quarter. At the end of this article we will also compare ZIXI to other stocks including Invivo Therapeutics Holdings Corp (NASDAQ:NVIV), Diana Shipping Inc. (NYSE:DSX), and USA Technologies, Inc. (NASDAQ:USAT) to get a better sense of its popularity.
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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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What have hedge funds been doing with Zix Corporation (NASDAQ:ZIXI)?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, up by 8% from the second quarter of 2016. By comparison, 14 hedge funds held shares or bullish call options in ZIXI heading into this year. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world, holds the most valuable position in Zix Corporation (NASDAQ:ZIXI). Renaissance Technologies has a $12.1 million position in the stock. The second most bullish fund is D E Shaw, holding a $3.6 million position. Other peers with similar optimism comprise Chuck Royce’s Royce & Associates, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors and Israel Englander’s Millennium Management. 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.
As industrywide interest jumped, key money managers have been driving this bullishness. Paul Marshall and Ian Wace of Marshall Wace LLP assembled the most valuable position in Zix Corporation (NASDAQ:ZIXI). Marshall Wace LLP had $1 million invested in the company at the end of the quarter. Dov Gertzulin’s DG Capital Management also made a $0.7 million investment in the stock during the quarter.
Let’s now review hedge fund activity in other stocks similar to Zix Corporation (NASDAQ:ZIXI). These stocks are Invivo Therapeutics Holdings Corp (NASDAQ:NVIV), Diana Shipping Inc. (NYSE:DSX), USA Technologies, Inc. (NASDAQ:USAT), and Old Line Bancshares, Inc. (MD) (NASDAQ:OLBK). This group of stocks’ market caps match ZIXI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NVIV | 4 | 3149 | -1 |
| DSX | 7 | 27523 | 0 |
| USAT | 8 | 5585 | 2 |
| OLBK | 3 | 11925 | -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 $12 million. That figure was $27 million in ZIXI’s case. USA Technologies, Inc. (NASDAQ:USAT) is the most popular stock in this table. On the other hand Old Line Bancshares, Inc. (MD) (NASDAQ:OLBK) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Zix Corporation (NASDAQ:ZIXI) 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
